Planning to invest in a new dry cleaning machine

Assignment Help Financial Management

Reference no: EM13988010

Tim Brown of Omega Drycleaners is planning to invest in a new dry cleaning machine worth $80,000. The life of the machine is estimated to be 12 years and at the end of this period the manufacturer will pay $10,000 for the old machine. The incremental cash flow from this investment is $10,000 per year. If the discount rate is 6% should Tim Brown invest in the machine? Would the decision change if the discount rate increase to 8%?

Reference no: EM13988010

Questions Cloud

Types of evidence during their audit of black oil : Assume that the auditors find serious weaknesses in the internal control of Black Oil, Inc., a producer and distributor of fine wines. Would these internal control weaknesses cause the auditors to rely more or less upon each of the following types..

Discuss any potential policy implications for the issue : Rationing Issues in Healthcare The concept of rationing healthcare is dealt with on a daily basis. Healthcare rationing in the United States exists in various forms. Access to private health insurance is rationed based on price and ability to pay. Di..

Briefly describe two products-goods or services : Briefly describe two (2) products (goods or services) offered at a business you are familiar with. Next, identify two (2) major competitors and describe the two (2) products they offer that compete with yours.

What is the earliest event you can remember : What is the earliest event you can remember? How old were you at the time of the event? Describe the level of detail in the early memory and your certainty of the details compared to the same for an event that happened within the past 3 years

Planning to invest in a new dry cleaning machine : Tim Brown of Omega Drycleaners is planning to invest in a new dry cleaning machine worth $80,000. The life of the machine is estimated to be 12 years and at the end of this period the manufacturer will pay $10,000 for the old machine. The incremental..

Save each month to realise his retirement dreams : Kim Yee is 30 years of age and he visits his financial planner. He tells his financial planner that he would like to have $10,000 per month in his retirement. (He retires at age 60 and is expected to live till 100). When he is 45, he will receive $20..

Identify whether the study used quantitative methodology : Find an example of a good research study, and share the link with your classmates. You should also address the following: Explain why it is a quality study. Identify whether the study used quantitative or qualitative methodology

Calculate labour variances : This includes 12, 000 hours paid for @ Rs.7 per hour and 9,400 hours paid for @ Rs.7.50 per hour, the balance having been paid @ Rs.5 per hour. Calculate labour variances.

Outstanding bonds : Nungesser Corporation's outstanding bonds have a $1,000 par value, a 9% semiannual coupon, 20 years to maturity, and an 10% YTM. What is the bond's price? Round your answer to the nearest cent.

User Account

All Pages