The Borstal Company has to choose between two machines that do the same job but have...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A Machine B 0 $ 49,000 $ 59,000 1 11,800 11,600 2 11,800 11,600 3 11,800+ replace 11,600 4 11,600 replace These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 12% real discount rate and ignore taxes. Note: Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places. b. Which machine should Borstal buy? c. If there is steady 6% per year inflation, what will be the annual rental payment for machine B for the second year? Note: Enter your answer as a positive value rounded to 2 decimal places. Answer is complete but not entirely correct. Annual Rental Payment a. Machine A $ 31,224.83 x a. Machine B $ 199,148.00 X b. Which machine should Borstal buy? Machine B c. Year 2 rental payment $ 211,096.88 x The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A Machine B 0 $ 49,000 $ 59,000 1 11,800 11,600 2 11,800 11,600 3 11,800+ replace 11,600 4 11,600 replace These costs are expressed in real terms. a. Suppose you are Borstal's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 12% real discount rate and ignore taxes. Note: Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places. b. Which machine should Borstal buy? c. If there is steady 6% per year inflation, what will be the annual rental payment for machine B for the second year? Note: Enter your answer as a positive value rounded to 2 decimal places. Answer is complete but not entirely correct. Annual Rental Payment a. Machine A $ 31,224.83 x a. Machine B $ 199,148.00 X b. Which machine should Borstal buy? Machine B c. Year 2 rental payment $ 211,096.88 x
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Methanol, CH3OH, is prepared industrially from the gasphase catalytic balanced reaction that has been depicted here using molecular models. In a laboratory test, a reaction vessel was filled with...
-
List the errors in the following Stockholders' Equity section of the balance sheet prepared as of the end of the current year. Stockholders' Equity Paid-in capital: Preferred 2% stock, $150 par...
-
Throughout 2009, the world was plagued with the H1N1 swine flu epidemic. The H1N1 influenza virus, which began in Mexico, spread rapidly. In June, the World Health Organization (WHO) declared it to...
-
What went wrong with the evaluation meeting? Healthrus System had two goals for its annual employee performance evaluations: (1) to motivate employees to work hard and (2) to identify areas in which...
-
Nex Company uses both special journals and a general journal as described in this chapter. On June 30, after all monthly postings had been completed, the Accounts Receivable control account in the...
-
\f
-
Kate, aged 42, is an Australian resident taxpayer with private patient hospital health insurance. Kate does have a HELP debt of $18,500 as at 30 June 2020. Kate's income tax circumstances in respect...
-
If a treasury note has a bid price of $996.25, the quoted bid price in the Wall Street Journal would be _________.
-
Provide an example of a company or organization that has crafted an innovation geared for underserved communities. Briefly highlight key elements of the innovation and why you find it to be a useful...
-
(a) In the Hough Transform, a point (x0, y0) in the xy-plane is mapped into a curve in the (p, 0)-parameter space. Write down the equation of the curve. (b) If we apply the Hough transform on the...
-
The following transactions pertain to an ALBANY COMPANY branch's second month's operations in June, 2020: 1. The HOME OFFICE sent P14,400 cash to the BRANCH. 2. The HOME OFFICE shipped inventory...
-
A. Calculate the number represented by sign 1 exponent (8 bits) 00011110 Using the formula: fraction (23 bits) 00110101111100110011000 23 number = (-1) sign (1+b_2-1)x2(e-127) i=1
-
195 Es) Suppose that the algebraic expression for the z-transform of xn = 1-2 2 (1 + ) (1 + + ) nt regions of convergence.co 2
-
Provide the correct answer that is related to the question! Don't write the answer from Chat gpt! Q2: Redo the same calculations (No code is allowed to be used for this question) using the following...
-
What are multinational corporations (MNCs) and what economic roles do they play?
-
Take the communication quiz at www.mindtools.com/pages/article/ newCS_99.htm (Mind Tools 2016). Write a one-page paper describing your communication strengths and weaknesses.
-
Your uncle is a proud owner of an up-market clothing store. Because business is down he is considering replacing the languishing tie department with a new sportswear department. In order to examine...
-
You are the owner of a factory that supplies chairs and tables to schools in Denver. You sell each chair for $1.76 and each table for $4.40 based on the following calculation: You have received an...
Study smarter with the SolutionInn App