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You are in charge of procuring a machine for your factory. The process will take about a year to complete and is a major investment in specialized equipment that will make or break the profitability of the company. It is expected the equipment will offer a 7 year advantage after which it will need to be replaced. There is a choice of the manufacturer of the equipment. •Manufacturer A will provide their model with a capacity of 1,000 widgets per month, and the equipment will require maintenance for 2 weeks each year. The procurement cost will be $1 million in Korea. The delivery costs from Korea to the US factory will be $95,000. Total costs will be $10 per widget and the revenue will be $25 per widget.. •The competitor Manufacturer B offers a model from Germany at a cost of $1.2 million, with a delivery cost to the US factory of $100,000 and a capacity of 1,150 widgets per month. The total costs for operation will be $9 per widget, and the machine will require maintenance every 2 years for 2 weeks.. The demand for the widgets is expected to be 1,000 widgets per month for years one to three inclusive, and thereafter at 1,100 widgets per month for the remainder of the lifetime of the equipment. Maintenance cost will be $10,000 per week for Manufacturer A and $9,000 per week for Manufacturer B. The revenue and costs will escalate by 4% per year over the lifetime of the machine, as will the maintenance costs. The first maintenance cost is the expected value and escalation occurs after this first maintenance. Complete a TCO analysis for these two machines. Show the NCF and the NPV for each of the machines. Questions: 1.Which machine would be purchased if the decision is made solely on price?. 2.What is the NCF for each Machine?. 3.What is the NPV for each machine if the discount factor is 15%?. 4.Which of these machines should the company purchase based on a TCO analysis?. 5.Is the investment value to the company worth undertaking if the WACC for the company is 13%?.
If the company borrows money at 12% to pay for the purchase on the last day of the discount period and pays the loan off on the last day of the credit period, what would be the net savings for the company?
During the month of March, the Easter Bunny produced 10,000 chocolate eggs. What is the Easter Bunny’s breakeven in units? In dollars? How many units would the Easter Bunny need to sell if he wanted to make target profit of $10,000? What would his sa..
Compute the amount to be withheld from each employee's earnings on November 15 for (a) FICA-OASDI, (b) FICA-HI, and (c) SUTA, and determine the total employee taxes.
The investment balance of a firm is $5,000,000 at the beginning of a two-year period and $7,000,000 at the end. The firm makes a single contribution during the two-year interval of $1,200,000. What is the difference between the approximate annual dol..
1.Review the balance sheet of Arctic Cat in Appendix A. Identify the amount for property and equipment.
Prepare a trial balance with the accounts arranged as illustrated in the chapter, and fill in the missing amount for Cash and prepare an income statement, a retained earnings statement, and a classified balance sheet for the month of July 2012
Analyze the method of accounting used for the general fund and all other funds in existence by the government and evaluate the reasoning for the use of the method of accounting for each of the funds as required by GAASB.
A system that consists of an integrated set of computer-based and manual components established to collect, store, and manage data and to provide output information to users is a(n)
Include cleaning, lubricating, and normal adjusting-Are treated as expenses
question 1.robertson inc. prepares its financial statements according to international financial reporting standards.
On July 1, 2008, Falk Company signed a contract to lease space in a building for 20 years. The lease contract calls for annual (prepaid) rental payments of $90,000 on each July 1 throughout the life of the lease and for the lessee to pay for all a..
The corporation's net operating income is $31,800. The YDI Division's divisional segment margin is $111,800 and the QCC Division's divisional segment margin is $152,800. What is amount of the common fixed expense not traceable to the individual d..
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