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.

Sample Solution

Not the Chemical Kind of Reaction

One of the numerous hypotheses I have is that all the activities throughout our life can be ascribed to a straightforward decision: regardless of whether we are attempting to take care of the issue. Individuals can characterize as indicated by their propensities for one of these decisions and the primary job of Edith Wharton’s Ethan Frome must be characterized by his preparation as opposed to administration. He didn’t attempt to take care of the issue, yet frequently didn’t settle on a cognizant choice and just reacted to his circumstance. It is hard to track down a model with Ethan’s drive, yet his rash reacts well.

Photochemistry is a science field that manages synthetic responses. It is identified with the different brilliant energies shaped during compound responses. Photochemists test synthetic responses. They as a rule respond just at high temperature bright radiation at room temperature. The response rate can be constrained by changing the power of the perception radiation. X-beams and gamma beams are normally utilized in these methodology. The most significant photochemical response is photosynthesis. Carbon dioxide and water consolidate with chlorophyll as an impetus to discharge oxygen. Photochemical responses are brought about by photons produced from the light source. Reactant atoms assimilate photons and are energized. They are in this energized state and they can corrupt, ionize, respond with different particles, or create heat.

In photochemical responses, particles and atoms assimilate the vitality (photons) of the enlightenment light and convert it to the energized state. You would then be able to discharge this vitality by breaking synthetic bonds and producing free radicals. Instances of the photochemical response incorporate a hydrogen-oxygen response, an extreme polymerization, a chain response, and a revision response. Numerous significant procedures incorporate photochemistry. The most significant model is photosynthesis, most plants utilize sunlight based vitality to change over carbon dioxide and water as results to glucose and oxygen. People depend on photochemistry to frame nutrient D brought about by the photochemical response of rhodopsin. In fireflies, stomach catalysts catalyze the response of bioluminescence. Numerous significant photochemical responses, for example, ozone arrangement happen in the air of the earth and establish barometrical science.

Photosynthesis is the name of a progression of substance responses performed by plants that convert vitality from the sun into compound vitality as sugar. Specifically, plants respond with carbon dioxide and water utilizing vitality from daylight, creating sugar (glucose) and oxygen. Albeit numerous responses happened, the general synthetic response to photosynthesis is as per the following. In plants, carbon dioxide diffuses into the pores of the leaves. Water is ingested through the roots and brought to the leaves through the wood. Sun oriented vitality is consumed by leaf chlorophyll. Photosynthetic responses happen in the chloroplasts of plants. In photosynthetic microscopic organisms, this procedure happens where chlorophyll or related colors are installed in the plasma film. Oxygen and water delivered by photosynthesis are released through the pores

This question has been answered.

Get Answer
WeCreativez WhatsApp Support
Our customer support team is here to answer your questions. Ask us anything!
👋 Hi, Welcome to Compliant Papers.