Reference no: EM13213101
Question #1
MedCo is a large manufacturing company, currently using a large printing press in its operations and is considering two replacements: the PDX341 and PDW581. The PDX341 costs £500,000 and has annual maintenance costs of £10,000 for the first five years and £15,000 for the next five years. After 10 years, the PDX341 will be scrapped (salvage value is zero). In contrast, the PDW581 can be acquired for £50,000 and requires maintenance of £30,000 a year for its 10-year life. The salvage value of the PDW581 is expected to be zero in 10 years.
Complete the following:
Assuming that MedCo must replace their current printing press (it has stopped functioning), has a 10% cost of capital and all cash flows are after tax, which replacement press is the more appropriate as calculated by using the NPV approach?
Question #2
ABC Ltd. produces an MP3 player. The market for this product is increasing, and for this reason, ABC is planning to expand its production capacity. This plan requires new machinery and an increase in working capital that would be financed with borrowing.
Complete the following:
1. What are the main sources of finance that can be considered?
2. What are the main factors that should be taken into consideration when deciding on the mix of long-term and short-term borrowing necessary to finance the expansion?
3. Identify and discuss the major factors that a bank would take into account before deciding whether to grant a loan to ABC Ltd.
|
Explain analyzed to determine the value
: The compound MgI2 times XH2O is analyzed to determine the value of X. A 1.557-g sample of the compound is heated to remove all the water, 1.0254 g of MgI2 remains
|
|
Explain how many grams of chlorine gas must be reacted
: How many grams of chlorine gas must be reacted with excess sodium iodide if 20.0 moles of sodium chloride are needed?
|
|
What is the expected equilibrium price and quantity of bonds
: An economist has estimated that, near the point of equilibrium, the demand curve and supply curve for bonds can be estimated using the following equation B: Price= -2/5 quantity + 940 Equation 1 B: Price= quantity + 500 Equation 2 a.
|
|
State a lewis structure consists information about covalent
: Identify the following compound made of H, N, and O described below. Write a Lewis structure that is consistent with the information given.
|
|
Mix of long-term and short-term borrowing
: What are the main factors that should be taken into consideration when deciding on the mix of long-term and short-term borrowing necessary to finance the expansion?
|
|
Determine the average consumer disposable income
: Suppose that the current market price of VCRs is $300, that average consumer disposable income is $30,000, and that the price of DVD players (a substitute for VCRs) is $500. Under these conditions annual U.S. demand for VCRs is 5 million per year.
|
|
Should xyz hire each day to maximize its profits
: Firm XYZ measured its MP of labor curve to be the following: MP = 4000 - 2L where L is the number of hours of labor hired per day. XYZ produces gadgets that are sold for $20 each and is able to hire workers for $10 per hour. How many hours of labo..
|
|
Explain what is the operator for this potential energy
: where e is the magnitude of the charge on an electron and ε0 is the vacuum permittivity (a fundamental constant). What is the operator for this potential energy?
|
|
What is the supply curve of hats shifted upward
: Last month Jones Hat Company sold 100 hats at $10 each. This month it raised the price of hats to $11 and sold 101 hats. This result indicates that another factor, such as income, changed, shifting the demand curve for hats to the right.
|