Expected benefit to cost ratio

Assignment Help Accounting Basics

Reference no: EM13258432

You are doing ananalysis on the feasibility of installing a drill press inyour

factory. Unfortunatelyyou are not clairvoyant and can only guess at the annualbenefits,

salvage value and lifetime (in years) of the drill press. These values, along with the probabilities of their occurrenceare given in the table below.

Potential annual benefit Probability Potential life time Probability Potential salvagevalue Probability

1500 20% 10 15% -200 15%
2000 50% 11 25% 0 25%
2200 20% 12 35% 500 50%
2500 10% 13 25% 1000 10%

If the drill press costs $10,000 determine the expected benefit to cost ratio of the project using a MARR of 15%. Should the automated drill press bepurchased?

Reference no: EM13258432

Questions Cloud

Calculate the projects expected npv : At the end of 15 years, the factory will be torn down at an estimated TCF of -$900 million. Calculate the projects expected NPV using a discount rate of 12%.

Calculate the magnetic fields due to displacement current : Calculate the magnetic fields due to the displacement current midway between the plates at a radius equal to half the plate radius

What remedies can mickey mouse claim : Mickey Mouse tells Betty Boop that he would like to purchase her collection of rare artwork so that he can resell it at an auction in Paris. Mickey Mouse offers $100,000.00 for the art.

Compute the ph of a buffer solution : Calculate the pH of a buffer solution that contains 0.25 M benzoic acid (C6H5CO2H) and 0.15 M sodium benzoate (C6H5COONa). [Ka = 6.5 ? 10-5 for benzoic acid]

Expected benefit to cost ratio : If the drill press costs $10,000 determine the expected benefit to cost ratio of the project using a MARR of 15%. Should the automated drill press be purchased?

What is this stock worth today at a 9 percent discount rate : After that time, the dividends will be held constant at $1.60 per share. What is this stock worth today at a 9 percent discount rate?

Discuss which theory is the source of motivation : Discuss which theory is the source of motivation for the majority of computer criminals. Be sure to justify your answer. Discuss which theory would produce the most dangerous criminals and/or criminal acts.

Journal entries to record the mortgage loan : Prepare the journal entries to record the mortgage loan and thefirst two installment payments.

Discuss the interests of such nations : The world’s poorest countries are at a competitive disadvantage in every sector of their economies. They have little to export.

User Account

All Pages