The XYZ Corporation is planning to purchase an extruder. The purchase price of the extruder is...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The XYZ Corporation is planning to purchase an extruder. The purchase price of the extruder is $350,000. The company plans to make a down payment of 25% of the first cost of the extruder and to make a 7-year, 10%, yearly payment loan for the rest of the first cost of the extruder. XYZ believes that the extruder can be sold for $75,000 at the end of its 15-year service life. The new extruder will increase the company's annual income by $90,000. Maintenance and operating costs are expected to be $4,000 during the first year and to increase by $1,200 each year. XYZ uses a before-tax MARR of 12% for its preliminary economic studies. What is the net present worth (NPW) of this investment to XYZ? The XYZ Corporation is planning to purchase an extruder. The purchase price of the extruder is $350,000. The company plans to make a down payment of 25% of the first cost of the extruder and to make a 7-year, 10%, yearly payment loan for the rest of the first cost of the extruder. XYZ believes that the extruder can be sold for $75,000 at the end of its 15-year service life. The new extruder will increase the company's annual income by $90,000. Maintenance and operating costs are expected to be $4,000 during the first year and to increase by $1,200 each year. XYZ uses a before-tax MARR of 12% for its preliminary economic studies. What is the net present worth (NPW) of this investment to XYZ?
Expert Answer:
Answer rating: 100% (QA)
To calculate the net present worth NPW of the investment we need to calculate the present worth of t... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
Ques 1: What is the major complaint by firms concerning the Sarbanes-Oxley act of 2012? A. the legislative maximum allowable compensation for a CEO. B. the legal requirement to disclose project...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Required a. Use professional judgment in deciding on the preliminary judgment about materiality for earnings, current assets, current liabilities, and total assets. Your conclusions should be stated...
-
Split the number 750 into two numbers x and y so that the sum of 8% of the first number and 24% of the second number is 11.2% of the sum of x and y.
-
A rhinoceros is at the origin of coordinates at time I, = O. For the time interval from I, = 0 to 12 = 12.0 s, the rhino's average velocity has x-component -3.8 m/s and y-component 4.9 m/s. At time...
-
Stacey Womack is considering the implementation of an incentive wage plan to increase productivity in her small manufacturing plant. The plant is nonunion, and employees have been compensated with...
-
Background inventory data represent average environmental interventions related to a particular material used in a particular industry.Who supplies such information? Why has background inventory data...
-
Top managers of Video Avenue are alarmed by their operating losses. They are considering dropping the DVD product line. Company accountants have prepared the following analysis to help make this...
-
5 [10 points]. We provide web-site design services for small and medium businesses. We bid for design jobs based largely on our estimated cost of doing the design job. We estimate the cost of using...
-
Effective financial statement analysis requires an understanding of a firms economic characteristics. The relations between various financial statement items provide evidence of many of these...
-
write out each question and the answer, also provide a one sentence answer each true and false question in the form of a sentence. Review Questions (True or False) Test Your Understanding You will...
-
How and why does an auditor test intercompany and interbank transfers?
-
Which of the following would not likely be a related party transaction? a. Sales to another corporation with a similar name. b. Purchases from an entity controlled by the purchasing entity's majority...
-
How does an auditor test whether recorded receivables represent bona fide rights of the client?
-
Ashton Tate, an in-charge auditor, has completed the year end physical inventory observation at a large wholesaler of automotive parts. Tate reviewed managements inventory-taking instructions before...
-
Under Statement on Auditing Standards No. 57, "Auditing Accounting Estimates," an auditor is responsible for: a. Making accounting estimates. b. Evaluating the reasonableness of management's...
-
Statement of cost of goods manufactured for Sunshine Manufacturing Company for the Month ended March 31, 2023. The following information is available for Sunshine Company for 2023: Inventories...
-
During registration at Tech every quarter, students in the Department of Management must have their courses approved by the departmental advisor. It takes the advisor an average of 4 minutes...
-
Sasha Inc. (SI) is a public company located in Canada that operates a chain of retail stores. SI reports its financial statements in Canadian dollars and has recently started to purchase goods from...
-
What is meant by foreign currency risk for a company?
-
On January 1, 2010, Septor acquired 75% of the issued shares of Zejest for $125,750. At this date, the records of Zejest included the following balances: Share capital.......... $80,000 Retained...
-
The adjusted trial balance of Marshall Ltd. at December 31, 2020. Requirements 1. Prepare Marshall Ltd.'s 2020 income statement, statement of retained earnings, and balance sheet. List expenses...
-
Fred's Catering Ltd. had the following selected transactions during May 2020: Requirements 1. Show how each transaction would be handled using the cash basis and the accrual basis, Under each column,...
-
The balance sheet at December 31, 2018, 2019) and 2020 and income statement for the years ended December 31, 2018, 2019, and 2020 for Ojibway Inc. include the following data: Requirements Use the...
Study smarter with the SolutionInn App