What is the equivalent annual cost of investing

Assignment Help Basic Statistics
Reference no: EM132150496

Blooper Industries must replace its magnoosium purification system. Quick & Dirty Systems sells a relatively cheap purification system for $15 million. The system will last 5 years. Do-It-Right sells a sturdier but more expensive system for $21 million; it will last for 7 years. Both systems entail $2 million in operating costs; both will be depreciated straight-line to a final value of zero over their useful lives; neither will have any salvage value at the end of its life. The firm's tax rate is 20%, and the discount rate is 12%. Either machine will be replaced at the end of its life.

a. What is the equivalent annual cost of investing in the cheap system? (Do not round intermediate calculations. Enter your answer as a positive value. Enter your answer in millions rounded to 3 decimal places.)

b. What is the equivalent annual cost of investing in the more expensive system? (Do not round intermediate calculations. Enter your answer as a positive value. Enter your answer in millions rounded to 3 decimal places.)

Reference no: EM132150496

Questions Cloud

What is the return shareholders are expecting : Ecolap Inc. (ECL) recently paid a $0.46 dividend. The dividend is expected to grow at a 12.50 percent rate. The current stock price is $49.72.
Responsibility for the success of their financial plan : To what extent does the client hold a responsibility for the success of their financial plan?
Comment on the merit of taking such an approach : "A Financial Planning Licensee striving for excellence in their fiduciary duty has decided to set a maximum limit of gearing for all client financial plans they
Company has a warehouse terminal in spartanburg : The Seaboard Shipping Company has a warehouse terminal in Spartanburg, South Carolina. The capacity of each terminal dock is 3 trucks
What is the equivalent annual cost of investing : What is the equivalent annual cost of investing in the cheap system?
What is this offer worth to? you : You are offered the right to receive 3,000 per year? forever, starting in one year. If your discount rate is 3?%, what is this offer worth to? you?
How does a firm navigate strategic management : How does a firm navigate strategic management in the context of an international environment?
How do you find the forward discount : How do you find the Forward Discount/Premium on the foreign currency for 7.4 & 7.5?
Debt-to-equity ratio for organization : Why is it important for leadership to know the debt-to-equity ratio for their organization?

Reviews

Write a Review

Basic Statistics Questions & Answers

  Information about the tails of the normal curve

Information about the tails of the normal curve asserts that the probability is 0.05 that a standardized score z falls below 1.645, and 0.05 that z falls above

  Denote the true average pressure

Newly purchased tires of a particular type re supposed to be filled to a pressure of 30 psi. Let µ denote the true average pressure

  An array of 30 led bulbs is used in an automotive light

an array of 30 led bulbs is used in an automotive light. the probability that a bulb is defective is 0.001 and

  How does increasing the sample size

How does increasing the sample size improve our estimate of effect size when we use estimated Cohen's d?

  Problem regarding the statistical inference

A retailer believes that its new advertising strategy will increase sales. Previously, the mean spending in 15 categories of consumer items in both the 18-34 and 35+ age groups was $70.00. (For all hypothesis tests, assume the level of significanc..

  Compare theoretical and experimental sampling strategies

The theoretical sampling strategy is a sampling method in which we sample with replacement and the order in which a participant is selected matters.

  Determine right interpretation for margin of error

Can we conclude from this that most workers there earn between $25 and $35 per hour? Is this right interpretation for margin of error?

  Computing probability by random number table

The professor wishes to use a random-number table to determine which letter choice should correspond to the correct answer for a question.

  Confidence interval for true population variance

Find a 95% confidence interval for the true population variance in all-electric miles for the Volt.- Find a 95% confidence interval for the true population variance in all-electric miles for the Prius.

  Assessment of international trade financing in thailand

Blades, Inc., has recently decided to establish a subsidiary in Thailand to produce Speedos, Blades' primary roller blade product. In establishing the subsidiary in Thailand, Blades was motivated by the high growth potential of the Thai roller bla..

  What can you conclude about the research hypothesis

STAT6000Health Research Methods. Assuming the assumptions for the statistical test you chose to do are met, what can you conclude about the research hypothesis after you run the statistical analyses

  How much will the mass diminish each minute

Do the data indicate that the mass of the spill tends to diminish as time increases? If so, how much will the mass diminish each minute?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd