Water filtration system to assist in circuit board

Assignment Help Financial Management

Reference no: EM131881953

Aerotron Electronics is considering the purchase of a water filtration system to assist in circuit board manufacturing. The system costs $40,000. It has an expected life of 7 years at which time its salvage value will be $7,500. Operating and maintenance expenses are estimated to be $14,000 per year. If the filtration system is not purchased, Aerotron Electronics will have to pay Bay City $14,000 per year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must borrow 1/2 of the purchase price, but they cannot start repaying the loan for 2 years. The bank has agreed to 3 equal annual payments, with the 1st payment due at the end of year 2. The loan interest rate is 8% compounded annually. Aerotron Electronics’ MARR is 10% compounded annually.

Reference no: EM131881953

Questions Cloud

What is? dewyco cost of capital for preferred? stock : Dewyco has preferred stock trading at $ 53 per share. What is? Dewyco's cost of capital for preferred? stock?

Prepare the adjusting entry to record depreciation expense : Prepare the adjusting entry to record the depreciation expense for the current year.

Employee wages that have been earned by the employees : At the end of the year, there is $9,000 worth of employee wages that have been earned by the employees,

What is the adjusting entry to record insurance expense : What is the adjusting entry to record insurance expense for the current year?

Water filtration system to assist in circuit board : Aerotron Electronics is considering the purchase of a water filtration system to assist in circuit board manufacturing

Journal entry to record the declaration of the dividends : Prepare the general journal entry to record the declaration of the dividends.

Two-thirds of the work has been completed : As of the year ended December 31, 20X1, two-thirds of the work has been completed. Record the necessary adjusting journal entry.

Prepare the general journal entry : A company sold $1,500 worth of goods and received immediate payment. Prepare the general journal entry?

What avicorp pretax cost of debt-effective annual return : What is Avicorp's pre-tax cost of debt Note: Compute the effective annual return. If Avicorp faces a 40 % tax rate, what is its after-tax cost of debt?

User Account

All Pages