Dr Nick

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About Dr Nick

Levels Tought:
Elementary,Middle School,High School,College,University,PHD

Expertise:
Art & Design,Computer Science See all
Art & Design,Computer Science,Engineering,Information Systems,Programming Hide all
Teaching Since: May 2017
Last Sign in: 245 Weeks Ago, 6 Days Ago
Questions Answered: 19234
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Education

  • MBA (IT), PHD
    Kaplan University
    Apr-2009 - Mar-2014

Experience

  • Professor
    University of Santo Tomas
    Aug-2006 - Present

Category > Programming Posted 02 Aug 2017 My Price 15.00

a New Office Machine

The company is considering the addition of a new office machine that will perform many of the tasks now performed manually. For this week's task, Gerry has given you the responsibility of evaluating the cash flows associated with the new machine. He has requested the report to be delivered within the week.

Evaluation of a New Office Machine

The Cosmo K Manufacturing Group currently has sales of $1,400,000 per year. It is considering the addition of a new office machine, which will not result in any new sales but will save the company $105,500 before taxes per year over its 5-year useful life. The machine will cost $300,000 plus another $12,000 for installation. The new asset will be depreciated using a modified accelerated cost recovery system (MACRS) 5-year class life. It will be sold for $25,000 at the end of 5 years. Additional inventory of $11,000 will be required for parts and maintenance of the new machine. The company evaluates all projects at this risk level using an 11.99% required rate of return. The tax rate is expected to be 35% for the next decade.

Tasks:

Answer the following questions:

  • What is the total investment in the new machine at time = 0 (T = 0)?
  • What are the net cash flows in each of the 5 years of operation?
  • What are the terminal cash flows from the sale of the asset at the end of 5 years?
  • What is the NPV of the investment?
  • What is the IRR of the investment?
  • What is the payback period for the investment?
  • What is the profitability index for the investment?
  • According to the decision rules for the NPV and those for the IRR, is the project acceptable?
  • Is there a conflict between the two decision methods? If so, what would you use to make a recommendation?
  • What are the pros and cons of the NPV and the IRR? Explain your answers.

Submission Details:

  • Show the data used and the calculations for each question in a Microsoft Excel sheet and the analysis in a Microsoft Word document.
  • Name your Microsoft Excel sheet MBA6010_W3_A2_LastName_ FirstName.xls and your Microsoft Word document MBA6010_W3_A2_ LastName_FirstName.doc.
  • Submit your assignment to the W3 Assignment 2 Dropbox by Tuesday, July 11, 2017.

Answers

Dr Nick
(3)
Status NEW Posted 02 Aug 2017 07:08 AM My Price 15.00

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