Recommend egg grading machine

Assignment Help Financial Management

Reference no: EM131923621

Based upon your experience, you need to recommend which egg grading machine should be purchased for the farm coop you recently joined. Everyone in the area that might use the egg grader has submitted their expected yield for the next four years. SuperEgg is the top machine based upon the feelings of most other members but you have noticed that their machines do not historically have any secondary market. Your research shows that the machines wear out and are not economical to repair after four years of use. CorrectEgg is a less popular choice but as part of their green initiative has a buy back program where you can return the machine after four years for 20% of its sales price. Unfortunately, the CorrectEgg machine runs slower which means that the cash flows from savings would be slightly lower. Both machines cost $10,000 and the cost of capital for the Coop is 12%. SuperEgg will save $3,500, $3,600, $3,500 and $3,700. CorrectEgg will save 90% of the SuperEgg model.

What is your recommendation: SuperEgg or CorrectEgg, and why (provide an explanation)?

Reference no: EM131923621

Questions Cloud

Find the Gross Margin and EBITDA : Find the Gross Margin and EBITDA

Annual storage costs-annual order costs associated with EOQ : What are the total costs (annual storage costs + annual order costs) associated with the EOQ?

What range would that transfer price be : Division R makes watzits. The company has sufficient capacity to make 70,000 watzits per year. what range would that transfer price be?

Annual storage costs associated with EOQ : The interest rate is 2.50%. What are the annual storage costs associated with the EOQ?

Recommend egg grading machine : You need to recommend which egg grading machine should be purchased for the farm coop you recently joined.

What is optimal order amount according to EOQ : what is the optimal order amount according to the EOQ?

What are annual order costs associated with EOQ : AIA Inc. is looking to manage its cash position using the EOQ model. What are the annual order costs associated with the EOQ?

Determine taxable income and income taxes payable : Determine taxable income and income taxes payable, the change in deferred taxes payable (future taxable and deductible amounts), and tax expense for 2016.

What is the pretax required return on gordon stock : If the aftertax expected returns on the two stocks are equal, what is the pretax required return on Gordon’s stock?

User Account

All Pages