Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Management Expert

Company makes decision to purchase the new equipment to replace existing equipment that was obtained five years ago at a cost of $5,000,000.

Research fee $80,000 was spent last year for new equipment. Information of existing equipment and proposed new equipment are given as follows:

Existing equipment is expected to give eight more years of service if major repairs of $588,000 are performed three years from now. Annual cash operating costs total= $3,000,000 and are not expected to change in future periods. Estimated market value of existing equipment in eight years is $735,000. Company may sell existing equipment now for $3,528,000 and purchase new equipment.

New equipment has the service life of eight years, is expected to decrease operating costs by $882,000 annually, and has the estimated residual value of $2,646,000. Major repairs of $220,500 for new equipment will be necessary at the end of fifth year of operation. Moreover, to finance new equipment, it seems that your company would have to borrow $3,000,000 at 7% interest annually from OPEN Bank.

If IRR is 15%, tell me how to determine maximum price that company would be eager to pay for new equipment? Ignore taxes.

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M932864

Have any Question? 


Related Questions in Business Management

Assignmentwrite a 700- to 1050-word comprehensive paper a

Assignment Write a 700- to 1,050-word comprehensive paper. A comprehensive paper should incorporate concepts from your previous GEN/201 coursework including but not limited to: The Continuing Academic Success Thesis/Outl ...

In 300 words public administration cannot exist outside of

In 300 words. Public administration cannot exist outside of its political context. Discuss how politics affects the policymaking process and the delivery of governmental services. American Society of Public Administratio ...

Find the appropriate value for the decrypting keys n and d

Find the appropriate value for the decrypting keys n and d in the RSA public key cryptology system based system based on the primes p = 7 and q = 19 and the encryption key e = 5

Was washington mutual bank affected by the

Was Washington Mutual Bank affected by the Gramm-Leach-Bliley Act of 1999? If so, how?

Writenbspa 700- to 1050-word paper in which you describe

Write  a 700- to 1,050-word paper in which you describe the importance of operations and supply chain management to a company's strategy, and define the dimensions of quality. Discuss the key factors that have contribute ...

Identify an ethical decision that has been made upper

Identify an ethical decision that has been made upper management in your workplace. What values does the decision demonstrate? Are they consistent with the stated values of your organization? What impact did the decision ...

Strategic alliances and human resource Strategic Alliances and Human Resource Management

Strategic Alliances and Human Resource Management Background. LGE is one of the leading global companies in the industry. It is composed of five divisions: air conditioning, business solutions, home appliances, home ente ...

Managementstructures and frameworksbullexplain formal and

Management Structures and Frameworks • Explain formal and informal structures and decipher between traditional and non-traditional frameworks. Describe the characteristics that set functional, divisional, and matrix stru ...

Assignment lasa- ikea analysis reportwhat is values-based

Assignment: LASA- IKEA Analysis Report What is values-based service? How can a company create value for customers and other stakeholders? Values-based service is defined as service that is firmly based on the core compan ...

Linear programminga company produces two products a and b

Linear Programming: A company produces two products A and B. The sales volume of A is at least 80% of the total sales of both A and B. However, the company cannot sell more than 100 units of product A per day. Both produ ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro