Interstate Manufacturing is considering either overhauling an old machine or replacing it with a new machine. Information about the two alternatives follows. Management requires a 10% rate of return on its investments.
Alternative 1: Keep the old machine and have it overhauled. This requires an initial investment of $150,000 and results in $50,000 of net cash flows in each of the next five years. After five years, it can be sold for a $15,000 salvage value.
Cost of old machine $111,000
Cost of overhaul 158,000
Annual expected revenues generated 106,000
Annual cash operating costs after overhaul 43,000
Salvage value of old machine in 5 years 16,000
Alternative 2: Sell the old machine for $29,000 and buy a new one. The new machine requires an initial investment of $300,000 and can be sold for a $20,000 salvage value in five years. It would yield cost savings and higher sales, resulting in net cash flows of $65,000 in each of the next five years.
Cost of new machine $291,000
Salvage value of old machine now 34,000
Annual expected revenues generated 94,000
Annual cash operating costs 22,000
Salvage value of new machine in 5 years 15,000
Required:
1. Determine the net present value of alternative 1.
2. Determine the net present value of alternative 2.
3. Which alternative should management select based on net present value?

Answers

Answer 1

1. The net present value of Alternative 1 is $90,755.

2. The net present value of Alternative 2 is $14,355 with the sale proceeds of the old machine.

3. Based on the net present value, Interstate Manufacturing should overhaul the old machine instead of replacing it with the new one.

Data and Calculations:

Required rate of return = 10%

                                                           Alternative 1    Alternative 2

Cost of old machine                               $111,000         ($29,000)

Cost of overhaul                                     158,000        $300,000

Expected annual revenues                   106,000             94,000

Expected annual operating costs          43,000             22,000

Net cash flows for 5 yrs                        63,000             72,000

Salvage value after 5 yrs                        16,000             20,000

PV annuity factor of 10% for 5 years = 3.7908

PV factor of 10% for 5 years = 0.6209

                                                           Alternative 1    Alternative 2

PV value of annual net cash flows     238,820           272,937

PV value of Salvage value                      9,935              12,418

Present value of cash inflows          $248,755        $285,355

Cost of overhaul/Investment             (158,000)       (300,000)

Proceeds from the sale of old machine                     29,000

Net present value                              $90,755           $14,355

Thus, based solely on the net present values of alternatives 1 and 2, Interstate Manufacturing should overhaul the old machine (alternative 1) because it yields a greater net present value than alternative 2.

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Related Questions

According to the income balance, the “+” sign refers to _____ and the “-” sign refers to _____

Answers

Answer:

positive negative or addition and subtraction

incoming dollars coming in when merchandise is exported; dollars that leave the country to pay for imports

3 of 45
In order to determine exactly what portion of a mortgage loan the VA will guarantee on behalf of
a qualified veteran, the borrower must apply for a

Answers

Answer:

Certificate of Eligibility (COE)

Explanation:

In order to determine exactly what portion of a mortgage loan the VA will guarantee on behalf of a qualified veteran, the borrower must apply for a Certificate of Eligibility (COE).

The Certificate of Eligibility (COE) is a letter issued by the Department of Veterans Affairs (VA), which attests the eligibility of the veteran for a VA-backed home loan. There are a few ways to obtain a COE:

Through mail, by filling out the VA Form 26-1880 (Request for Certificate of Eligibility).Through the VA's website.Through lenders.

Veterans must also have at least one of the following Character of Service (COS) requirements upon discharge from the military: Honorable, General, Uncharacterized, and Under Honorable Conditions.  

Helen Bedru is the assistant controller of Cotton Cravat Co., a subsidiary of HG automotive, which manufactures tailpipes, mufflers, and catalytic converters at several plants throughout Ethiopia . Because of pressure for lowerselling prices, Cotton Cravat Co. has had disappointing financial performance in recent years. Indeed, Helen is aware of rumblings from corporate headquarters threatening to close the plant. One of Helen's responsibilities is to present the plant's financial plans for the coming year to the corporate officers and board of directors. In preparing for the presentation, Helen was intrigued to note that the focal point of the budget presentation was a profit-volume graph projecting an increase in profits and a reduction in the break-even point. Curious as to how the improvement would be accomplished, Helen ultimately spoke with Kiruvel Mesfin, the plant manager. Kiruvel indicated that a planned increase in productivity would reduce variable costs and increase the contribution margin ratio. When asked how the productivity increase would be accomplished, Kiruvel made a vague reference to increasing the speed of the assembly line. Helen commented that speeding up the assembly line could lead to labor problems because the speed of the line was set by union contract. Kiruvel responded that he was afraid that if the speedup were opened to negotiation, the union would make a big "stink" that could result in the plant being closed. He indicated that the speedup was the "only way to save the plant, our jobs, and the jobs of all plant employees." Besides, he did not believe employees would notice a 2 or 3 percent increase in speed. Kiruvel concluded the meeting observing, "You need to emphasize the results we will accomplish next year, not the details of how we will accomplish those results. Top management does not want to be bored with details. If we accomplish what we propose in the budget, we will be in for a big bonus."

Required: What advice do you have for Helen Bedru?Support your response with sufficient and sound reasoning​

Answers

Helen Bedru can present the year's budget based on speeding up the assembly line if Kiruvel can further convince her of the possibility of achieving the plant's target. All stakeholders  should be interested in keeping the plant running.

It is the responsibility of Helen to get all the required data for the budget. The budget should be based on verifiable facts and figures without padding. If she is convinced that the plant manager's strategy is implementable, she should work out the budget based on this new strategy.

It makes business sense to allow the plant to lower its variable costs by speeding up the assembly line and eliminating inefficiencies.

Thus, Helen Bedru needs to work with Kiruvel on the details of his strategy to achieve the budget projections.

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State one effect the great depression had on many Americans?

Answers

Answer:

Great Depression

EXPLANATION:

I hope this helps (:

Help help help buissness help help

Answers

Answer:

B

Explanation:

Answer: B

Explanation:

how it can be used in addition to showing skills –use the account and debit card?

Answers

Answer:What happens when you use a debit card and use credit at the register?

Explanation:When you run your transaction as credit using your debit card, you are still authorizing a debit from your checking account. You will never be charged interest or receive a bill for doing this. Of course, choosing credit at the point-of-sale will not help you build your credit.

explain the appearance of earthworm in brief​

Answers

Explanation:

An earthworm is a terrestrial invertebrate that belongs to the phylum Annelida. They exhibit a tube-within-a-tube body plan, are externally segmented with corresponding internal segmentation, and usually have setae on all segments. They occur worldwide where soil, water, and temperature allow

A tax on the amount of money a person earns in a year is a(n)
A. income tax
B. sales tax
C. credit tax
O D. property tax

Answers

Answer:

A. Income Tax

Explanation:

Answer:income Tax

Explanation:I jus take a test

Dalia makes a little more money than she spends on her daily expenses and wants to put the extra away in a separate account in case she needs it for an emergency. Which type of account would be the best option for Dalia?​

Answers

the answer would be a savings account

Which type of reinforcement schedule results in the quickest learning

Answers

A continuous reinforcement schedule (CRF) presents the reinforcer after every performance of the desired behavior. This schedule reinforces target behavior every single time it occurs, and is the quickest in teaching a new behavior.

I bad at explaining things but a easy way to learn quicker (for me anyways) is by taking notes and going over them everyday and reading a little ahead then you have to. Also by going at your pace first till you get use to it before you start pushing your self a little harder.

This helps a lot but than again every one is different so I would honestly juts say to go slow at first and work your self up that way it would he a lot easier on you if you want to learn faster

Select the correct answer
What type of income is received through rent?
A. earned income
B. passive income
C. portfolio income
D. business income

Answers

It is B. passive income

Answer:

earned income is received through rent

7. The Moroccan monetary authority is using a heavily-managed float to keep the dirham at U.S. $0.12 per dirham. Under current foreign exchange market conditions, nonofficial supply and demand would clear at U.S. $0.15 per dirham.

a. Using official intervention, what does the official Moroccan monetary authority have to do to keep the exchange rate at U.S. $0.12 per dirham?
b. If the monetary authority believes that this is a temporary disequilibrium, what does the authority expect to happen soon?
c. If private investors and speculators believe that this is a fundamental disequilibrium, what actions are they likely to take?

Answers

Based on the information given, the thing that should be done to keep the exchange rate at $0.12 per dirham is to sell foreign currencies to get more dirham.

It should be noted that since the non-official supply and demand of dirham is pegged at $0.15/ Dirham and the actual rate is $0.12/dirham, it implies that the Dirham is devaluated.

 

The authority will believe that due to devaluation, net export will rise and this will increase the income of the country.

Lastly, the private investors and speculators will not invest because the currency has lost its value compared to the dollars.

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Management of Wee Ones (WO), an operator of day-care facilities, wants the company's profit to be subdivided by center. The firm's accountant has provided the following data:
Center Budgeted Revenue Actual Revenue Budgeted Direct Costs Actual Direct Costs Downtown $ 342,000 $ 363,300 $ 310,000 $ 347,600 Irvine 598,500 622,800 573,500 521,400 H. Beach 769,500 743,900 666,500 711,000 Totals $ 1,710,000 $ 1,730,000 $ 1,550,000 $ 1,580,000
WO's advertising, which is handled by the home office, is not reflected in the preceding figures and amounted to $74,000. Assume that management used the allocation base that is most influenced by advertising effort and consistent with sound managerial accounting practices. How much advertising would be allocated to the Irvine center?

Answers

Imma need more than 10 pionts1299 wo2929191

Match the technology with the appropriate task

Answers

Answer:

1. e-mail = send a message and an attached document to ten staff members

2. GPS = get directions to a destination

3. fax machine = send a copy of documents to another office

4. Web browser = search the Web for information

5. word processor = type a business letter

This SKU has an inconsistent product classification with the ASIN. Please submit a feed to update this SKU to match the ASIN product classification

Answers

It should be noted that a stock-keeping unit (SKU) means a scannable bar code that is usually seen on product labels that are in a retail store.

Your information is incomplete. Therefore, an overview of SKU will be given. The stock-keeping unit (SKU) allows vendors to be able to track the movement of their inventory.

On the other hand, ASIN stands for Amazon Standard Identification Number. It is a ten letters unique identifier for a product that is given by Amazon.

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What is a "strategic move"?
A strategic move is
1) the outcome of a game in which each player is doing the best it can regardless of what its competitors are doing
2) a commitment to reduce one's options
3) an action that obeys the rules of the game
4) a strategy that is optimal no matter what an opponent does.
5) a value associated with a possible outcome

Answers

Answer:

four

Explanation:

The answer is four because the dictionary definition is "in order to gain a strategic advantage and increase one's payoff." If you have an advantage than it doesn't matter what your opponent does. So there for the answer is #4.

As a multinational corporation, Starbucks is able to


A establish coffee prices for all companies

B lower product standards

C sell coffee only in the United States

D sell coffee to other parts of the world

Answers

As a multinational corporation, Starbucks can D. sell coffee to other parts of the world.

Characteristics of a multinational corporation: It is registered and has business operations in more than one country.For example, Starbucks has its headquarters in the U.S.It can operate wholly or partially owned subsidiaries in other countries.Sell its franchise to other companies using its brand name.

Starbucks may not establish coffee prices for all companies or lower product standards, or sell coffee only in the United States.

Thus, Starbucks can sell coffee to other parts of the world.

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Answer: d

Explanation:

6.You now have the agreement with the company and will sign the contract as you and the company are satisfied with the contract agreement. Of course, this is will be your first step to build a strong relationship between you and your employer. Your manager will know more about you. This represent which of the negotiation process element?


A- Gather information

B- Manage concessions

C- Manage time

D- Build the relationship


7.You and the other party have either come to an agreement on the terms, or one party has decided that the final offer is unacceptable and therefore must be walked away from. Most negotiators assume that if their best offer has been rejected, there’s nothing left to do. You made your best offer and that’s the best you can do. This represent which of the negotiation process element?


A- Gather information

B- Manage concessions

C- Manage time

D- Build the relationship


8.Assemble the information you’ve gathered in a way that supports your position. You can present facts that show what you will contribute to the organization in the future, which in turn demonstrates your value. This represent which of the negotiation process element?


A- Gather information

B- Manage concessions

C- Manage time

D- Build the relationship

Answers

A- Gather information

B- Manage concessions

C- Manage time

D- Build the relationship

7.You and the other party have either come to an agreement on the terms, or one party has decided that the final offer is unacceptable and therefore must be walked away from. Most negotiators assume that if their best offer has been rejected, there’s nothing left to do. You made your best offer and that’s the best you can do. This represent which of the negotiation process element?

A- Gather information

B- Manage concessions

C- Manage time

D- Build the relationship

8.Assemble the information you’ve gathered in a way that supports your position. You can present facts that show what you will contribute to the organization in the future, which in turn demonstrates your value. This represent which of the negotiation process element?

A- Gather information

B- Manage concessions

C- Manage time

D- Build the relationship

Which of the following statements is the best way to state your position in a conflict?
a.
“I am concerned you aren’t telling people the truth about me.”
b.
“I feel betrayed by what was said about me.”
c.
“You aren’t telling me what you tell other people.”
d.
“You need to let me know what you think about me to my face.”

Answers

Answer:

A

Explanation:

A plainly states your position in an argument.

1. WHO CAN DO AFFILIATE MARKETING?

Answers

Answer:

anyone

Explanation:

is this the only question?

Amy currently volunteers at her local hospital. She would like to one day
become a doctor. What is the best type of student organization for Amy to
join?
A. One that has a focus on community service
B. One that has a focus on building marketing skills
C. One that has a focus on health care careers
O D. One that has a focus on technology careers

Answers

Answer:

C

Explanation:

C focuses on health care careers it makes the most sense if she wants to be a doctor.

One that has a focus on health care careers

Rachel borrows money from her bank to buy a car. What type of bank service
is Rachel using?
O A. Credit card
B. Checking account
C. Savings account
D. Loan

Answers

Answer:

D

Explanation:

A loan refers to money borrowed by people or organisations from the bank

The type of bank service which Rachel is using in order to buy a car is 'loan.'

What is a bank?

A bank, an financial institute that deals in money and its substitutes. A bank accepts deposits from the public and then creates a demand deposit while also simultaneously providing loans. Thus, banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money).

What services do banks provide?

Banks provide a lot of services to its customers. These services intends to attract customers. Such services provided by the banks are- giving loans, credit and debit cards, discounting on bills of exchange, cheque payments, digital financial services, and even personal services.

What do you mean by a loan?

A loan is a sum of money that one or more individuals or companies borrow from banks or other financial institutions so that they can manage planned or unplanned events financially.

When a loan is borrowed from a bank or other financial institution it has to be paid back, usually together with an extra amount of money called interest, that you have to pay as a charge for borrowing within a given period of time. Thus, loans provide liquidity to businesses and individuals, and so they are a necessary part of the financial system.

Hence, option D is correct.

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#SPJ2

Products that a seller sells in other countries are called
A. imports.
B. exports.
c. trade barriers.
D. quotas.

Answers

Answer:

im pretty sure it is A thx

Answer:

B. exports

Explanation:

It's leaving the country that the seller resides in.

expalain fiveprinciples of insurance​

Answers

Answer:

insurable interest, Utmost good faith, proximate cause, indemnity, subrogation and contribution.

QUESTION 7 of 10: What is an advantage of selling consumable items?
ОООО
a) They do not need refrigeration
b) They typically have a large profit margin
c) They are long-lasting
d) They tend to generate repeat business
Sulinit

Answers

Answer:

its D. they tend to generate repeat buisness

Explanation:

Answer: They tend to generate repeat business

What affects the egg coagulation in custards and creams!

Answers

What affects the egg coagulation in custards and creams!
Answer: Sugar is also important to custard as the addition of it in a recipe results in a softer custard. Sugar also increases the coagulation temperature and time. Don't dump the sugar directly onto the eggs and let it sit; this causes the yolks to "burn" into hard little lumps that detract from your creamy custard.
A small amount of cornstarch (or flour) added to the recipe helps with this. The starch molecules slow protein coagulation, making the egg proteins more resistant to overcooking and curdling (clumping).

In a custard or pudding, this coagulative property is responsible for the custard texture and mouthfeel. As one source says, “Eggs are the main thickener in most custard and the yolks make them smooth and rich.”3 Starch is often added to custard to slow the process of coagulation to help prevent overcooking the mixture.

Egg proteins denature and coagulate over a wide temperature range. Natural protein consists of complex, folded and coiled individual molecules. Loose bonds across the folds and coils hold each protein molecule in a tight, separate unit. These bonds can be disrupted when exposed to heat or acid, or by physical means such as whipping, causing the protein to denature.

Coagulation or gelation in eggs can be achieved by several different means, including heat (protein denaturation), mechanical (beating or chipping), sugar (raises the temperature for coagulation), acids (decrease temperature where coagulation is achieved), alkali (high alkali can induce gelling of egg white).4, 7

When two unfolded protein molecules with their oppositely charged ends approach each other, the molecules unite. Essentially, millions of protein molecules join in a three-dimensional network, or simply, they coagulate, causing the egg product to change from a liquid to a semisolid or solid.7

Coagulation influences egg products’ ability to foam, seal, thicken and more. This thickening capacity impacts viscosity in products such as pie fillings (i.e., pumpkin5) and desserts, such as cheesecake, where a lack of eggs or substitutions can negatively impact final product height, appearance, firmness and mouthfeel.6

There are more than 40 different proteins in a whole egg, some only located in the white and others predominantly in the yolk. These proteins influence the rate of denaturation and coagulation. Egg white protein coagulates between 144° F and 149° F (62.2° C and 65° C); egg yolk protein coagulates between 149° F and 158° F (65° C and 70° C); and whole egg protein coagulates between 144° F and 158° F (62.2° C and 70° C). However, a number of variables influence the rate of coagulation, as well as the ability of the proteins to remain in the three-dimensional network.

What low-risk investment can provide Kazuo income when he retires?
a. real estate
b. stocks
c. bonds
d. ira’s

Answers

Answer: D

Explanation:

Which of the following is not a legal right of a debtor?
A. The right to ignore persistent calls from a debt collector
B. The right to declare bankruptcy
C. The right to verify the amount of debt you owe
D. The right to protection from deceptive collection practices

Answers

Debtors are granted some measures or rights. The option that is not a legal right of a debtor is right to declare bankruptcy.

A lot of creditors often do not obey simple rules, and thus uses some kind of deceptive or intimidating actions so as to recover money they are owed.

A lot of creditors often uses threats of violence in trying to recover debt.

In the State of California’s Rosenthal Act, one, as a debtor, is known to have the right to be free from harassing letters and calls from creditors and collection agencies because of unpaid debt.

it is known to stop creditors from constantly disturbing one at home or sending threatening letters on a regular basis.

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Answer:

A. The right to ignore persistent calls from a debt collector

Explanation:

Which of the following is classified as
M22
A large certificates of deposit
B gold and silver
C money market accounts

Answers

I think is C

Hope this helps sry if I’m wrong

Which of the following should be included in an individual taxpayers federal gross income

Answers

Answer:

I believe your wages, dividends, business income, capital gain, retirement distributions as well as other income should all be included in an individual  gross business income

Explanation:

Let me know if this helps!

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