Reference no: EM13120236
Castille Pharmaceuticals (CP) currently leases testing equipment for use during the production of a product at a cost of $61,000 annually that includes all maintenance expenses. The product line produced on the machine has revenues of $100,000 annually. Three options need to be evaluated.
1. Continuing to lease the present machine at the same cost,
2. Purchase the existing machine (refurbished by the vendor at the vendor's expense) at a cost of $150,000. Maintenance costs are estimated at $18,000 annually.
3. Purchase a later model that is more accurate for $200,000. Annual maintenance costs are estimated at $18,000. Cost reductions in labor and fewer bad batches are estimated at $36,000 annually. Installation and training for this new machine would be $50,000 in year 0, which is also depreciable.
Both of the machines are guaranteed to have a five year life span with a salvage value of 15% of the machine's purchase price, which will be received at the end of the fifth year.
Use straight line depreciation and a tax rate of 35%.
Assuming that MARR is 10% and all maintenance costs and production savings are incurred at the end of the year, should the present lease be continued, or one of the two machines be purchased? Base your decision on the comparative present worth of each of the three alternatives.
|
Compute the volume charge density of the atmosphere
: Compute the volume charge density of the atmosphere, assuming it to be uniform between 300 and 450 m. (Hint: You may neglect the curvature of the earth. Why?)
|
|
Calculate the probability of a head on the first flip
: A silver dollar is flipped twice, calculate the probability of each of the following occurring: A, a head on the first flip
|
|
Prepare the journal entry to record the replenishment
: On 20 March, Batavia's petty cash fund of $100 is replenished when the fund contains $9 in cash and receipts for postage $51, freight-out $25, and travel expense $10. Prepare the journal entry to record the replenishment of the petty cash fund.
|
|
Compute the distance it travels during the third second
: A car traveling 90km/h slows down at a constant 0.50 m/s^2 just by "letting up on the gas." Compute the distance it travels during the third second.
|
|
Maintenance costs and production savings
: Assuming that MARR is 10% and all maintenance costs and production savings are incurred at the end of the year, should the present lease be continued, or one of the two machines be purchased?
|
|
What is the major issue involved in translation
: XYZ Corporation, with a division located in Germany, must translate its financial statements from euros to U.S. dollars. What is the major issue involved in translation?
|
|
What would be the amount of heat released
: calorimetry can be used to find heats of combustion. suppose a calorimeter helps someone to determine that 4032 kj of heat is released during the combustion of 88.0 grams of propane, C3H8 (44.0 g/mol).
|
|
How many students included in population mean
: How many more students should be included in the sample to be 99% sure the sample mean x is within $7 of the population mean u for all students at this college?
|
|
Determining mathematics - linear equations
: Linear equation that relates Celsius to Fahrenheit the oC is celsius in degrees and the oF is for Fahrenheit: Your company was very impressed with your results from the recent study. They have asked that you investigate another location for them an..
|