What is the present equivalent cost of each proposal

Assignment Help Financial Management

Reference no: EM131960583

The projected annual sales of an LED keychain are projected to be 25,000 the first year and increase by 10,000 per year until 55,000 are sold during the fourth year. Sales are then predicted to decrease by 5,000 per year in the fifth year and each year thereafter until 25,000 are sold in the tenth year. Proposal A is to purchase manufacturing equipment costing $100,000 with an estimated salvage value of $20000 at the end of 10 years. Proposal B is to purchase manufacturing equipment costing $245,000 with an estimated salvage value of $50,000 at the end of 10 years. The variable manufacturing cost per unit under proposal A is estimated to be $0.80, but only $0.25 under proposal B. A. If the interest rate is 9%, what is the Present Equivalent cost of each proposal for a 10-year production period? B. Which proposal should be accepted for a 10-year production period?

Reference no: EM131960583

Questions Cloud

Identify the relevant model codes of practice : SIT60316 - Establish and maintain a work health and safety system - Establish and maintain a work health and safety system - Identify the relevant model Codes

What is the labour force participation rate : If the working age population is 366,547, what is the labour force participation rate?

Find the easiest to implement and use in a global setting : Which of the three sets of cultural dimensions do you think you would find the easiest to implement and use in a global setting?

Analyzing the alternative tax systems : A three page (750 words) detailed, well-written essay (APA) analyze and consider alternative tax systems-such as a flat tax or a sales tax- in comparison.

What is the present equivalent cost of each proposal : If the interest rate is 9%, what is the Present Equivalent cost of each proposal for a 10-year production period?

Weights for investor to create her complete portfolio : Calculate the weights for the investor to create her Complete Portfolio. Calculate the Expected Return for this Complete Portfolio.

Equilibrium quantity of milk : A new per unit tax imposed on milk consumers is Not a possible explanation that the equilibrium quantity of milk has fallen while the market price has increased

How do customs manners and social structure figure into mix : How do customs, manners and social structure figure into the mix? What special skills would be required to be an effective global leader?

Prepare a project for all schools : You are the principle of a high school, The governor is concerned about the increase of school shootings. The governor has tasked you prepare a project.

User Account

All Pages