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Levels Tought:
University
| Teaching Since: | Apr 2017 |
| Last Sign in: | 439 Weeks Ago |
| Questions Answered: | 9562 |
| Tutorials Posted: | 9559 |
bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
Greasy Spoon has asked you to recommend a new biscuit making machine. After months of hard research, you have collected the following data:
|
Data |
Drop One |
No-Hole |
|
Life, Years |
6 |
9 |
|
First Cost (FC) |
$250,000 |
$385,000 |
|
Benefit, Yearly (AB) |
78,000 |
98,000 |
|
Gradient (ABG) |
1,500 |
1,500 |
|
M&O Gradient (M&OG) |
750 |
1,100 |
|
M&O Cost (M&O) |
25,000 |
31,000 |
|
Salvage Value |
45,000 |
50,000 |
Discussions with the accounting department reveal that a loan must be secured to purchase any machine. The loan data is as follows:
|
Data |
Drop One |
No-Hole |
|
Down Payment (% of FC) |
25% |
30% |
|
Loan Period, Years |
6 |
9 |
| Â | Â | Â |
The loan payments will be made annually. The lender will charge 10% interest with annual compounding. Your boss says she wants you to make a recommendation based upon a complete analysis of the data. She thinks the board making the decision will be financially diverse and may require you to present your estimates of NPV, EUAW, IRR and B/C Ratio Analysis using a 12% MARR. You do it and she says what rates between 0 and 35% is each alternative preferred, if they are at all
The----------- be-----------st -----------opt-----------ion----------- is----------- wh-----------at -----------I c-----------all-----------ed -----------OP2----------- (I-----------nv.----------- = -----------385-----------.00-----------0 ;----------- 9 -----------YRS-----------, e-----------tc)----------- an-----------d i-----------t i-----------s o-----------nly----------- ou-----------tpe-----------rfo-----------rme-----------d b-----------y O-----------P1 -----------whe-----------n t-----------her-----------e i-----------s n-----------o L-----------oan-----------