Questiontiger computers inc of singapore is considering the

Reference no: EM13348500

Question:

Tiger Computers, Inc., of Singapore is considering the purchase of an automated etching machine for use in the production of its circuit boards. The machine could cost $910,000. (All currency amounts are in Singapore dollars.) An additional $660,000 would be needed for installation costs and for software. Management believes that the automated machine could provide substantial annual reductions in costs, as given below:

Annual Reduction

in Costs

Labor costs $ 220,000

Material costs $ 95,500

The new machine would need considerable maintenance work to keep it properly adjusted. The company's engineers evaluate that maintenance costs would increase by $6,500 per month if the machine were purchased. In addition, the machine would need a $89,000 overhaul at the end of the ninth year.

The new etching machine would be usable for 13 years, after which it would be sold for its scrap value of $320,000. It would replace an old etching machine that will be sold now for its scrap value of $89,000. Tiger Computers, Inc., needs a return of at least 19% on investments of this type. (Ignore income taxes.)

Determine the appropriate discount factor(s) using tables.

Required:

Evaluate the annual net cost savings promised by the new etching machine. (Omit the "$" sign in your response.)

Annual net cost savings $

2a.

Using the data from requirement (1) and other data from the problem, evaluate the new machine's net present value. (Use the incremental-cost approach.) (Negative amount should be shown by a minus sign. Round discount factor(s) to 3 decimal places, shown and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Net present value $

2b.

Would you recommend that the machine be purchased?

Yes

Consider that management can identify various intangible benefits related with the new machine, including greater flexibility in shifting from one type of circuit board to another, improved quality of output, and faster delivery as a result of reduced throughput time. What dollar value per year would management have to attach to these intangible benefits in order to make the new etching machine an acceptable investment?

Reference no: EM13348500

Questions Cloud

Questionrecognize level within a database system user : questionrecognize level within a database system user programmer of application software designer of the dbms software

Question1 obviously conceptual data modelling is a : question1. obviously conceptual data modelling is a time-consuming and costly process. examine potential drawbacks to

Question1nbsp george harriet and ingrid are equal partners : question1.nbsp george harriet and ingrid are equal partners in the ghi partnership. georges adjusted basis ab in his

Questionyou are working on a project to increase an : questionyou are working on a project to increase an intranet and several people are confused about who requests to do

Questiontiger computers inc of singapore is considering the : questiontiger computers inc. of singapore is considering the purchase of an automated etching machine for use in the

Questiongiven two character strings s1 and s2 using c and : questiongiven two character strings s1 and s2. using c and pthread to write down a parallel program to find out number

Questioncrovo corporation utilize customers served as its : questioncrovo corporation utilize customers served as its measure of activity. during december the company budgeted for

Questionplan a payroll class that has data members for an : questionplan a payroll class that has data members for an employees hourly pay rate and number of hours worked.

Questionwesterville buckeye company produces and sells two : questionwesterville buckeye company produces and sells two products. cost and revenueinformation by product for the

User Account

All Pages