Unequal LivesThe Perez Company has the opportunity to invest in one of two mutually exclusive machines that willproduce a product
4 answers
Question:
Unequal Lives The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will
produce a product it will need for the foreseeable future. Machine A costs $8 million but realizes after-tax
inflows of $4.5 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs
$17 million and realizes after-tax inflows of $4 million per year for 8 years, after which it must be replaced.
Assume that machine prices are not expected to rise because inflation will be offset by cheaper components
used in the machines. The cost of capital is 13%. Using the replacement chain approach to project analysis,
by how much would the value of the company increase if it accepted the better machine? Do not round
intermediate calculations. Enter your answer in millions. For example, an answer of $1.23 million should be
entered as 1.23, not 1,230,000. Round your answer to two decimal places.
5.39 million
What is the equivalent annual annuity for each machine? Do not round intermediate calculations. Enter your
answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000
Round your answers to two decimal places.
$
Machine A: $
million
Machine B: S
million
produce a product it will need for the foreseeable future. Machine A costs $8 million but realizes after-tax
inflows of $4.5 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs
$17 million and realizes after-tax inflows of $4 million per year for 8 years, after which it must be replaced.
Assume that machine prices are not expected to rise because inflation will be offset by cheaper components
used in the machines. The cost of capital is 13%. Using the replacement chain approach to project analysis,
by how much would the value of the company increase if it accepted the better machine? Do not round
intermediate calculations. Enter your answer in millions. For example, an answer of $1.23 million should be
entered as 1.23, not 1,230,000. Round your answer to two decimal places.
5.39 million
What is the equivalent annual annuity for each machine? Do not round intermediate calculations. Enter your
answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000
Round your answers to two decimal places.
$
Machine A: $
million
Machine B: S
million
Answers
The answer would be holiday inn.
Move their business to mexico.
urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total
The correct answer is step.
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