accounting problems with all solutions-MedCo is a large manufacturing company and ABC clothing company is considering
Question # 00011038
Posted By:
Updated on: 03/27/2014 01:49 AM Due on: 04/12/2014
Hand-in Assignment Question 1:
MedCo is a large manufacturing company, currently using a large printing press in its operations and is considering two replacements: the PDX341 and PDW581. The PDX341 costs £500,000 and has annual maintenance costs of £10,000 for the first five years and £15,000 for the next five years. After 10 years, the PDX341 will be scrapped (salvage value is zero). In contrast, the PDW581 can be acquired for £50,000 and requires maintenance of £30,000 a year for its 10-year life. The salvage value of the PDW581 is expected to be zero in 10 years.
Complete the following:
• Assuming that MedCo must replace their current printing press (it has stopped functioning), has a 10% cost of capital and all cash flows are after tax, which replacement press is the more appropriate as calculated by using the NPV approach
Hand-in Assignment Question 2:
ABC clothing company is considering opening three retail stores in Manchester. It requires a £600,000 initial investment and expects to make £120,000 per year in the first four years and £240,000 every year for the following three years.
Complete the following:
• What is the payback period?
• One of the disadvantages of the payback method is that the time value of money is not considered when you calculate the payback period.
Please read the article below:
http://bizfinance.about.com/od/Capital-Budgeting/a/discounted-payback-period.htm
If the discount rate is 8%, what is the discounted payback period?
MedCo is a large manufacturing company, currently using a large printing press in its operations and is considering two replacements: the PDX341 and PDW581. The PDX341 costs £500,000 and has annual maintenance costs of £10,000 for the first five years and £15,000 for the next five years. After 10 years, the PDX341 will be scrapped (salvage value is zero). In contrast, the PDW581 can be acquired for £50,000 and requires maintenance of £30,000 a year for its 10-year life. The salvage value of the PDW581 is expected to be zero in 10 years.
Complete the following:
• Assuming that MedCo must replace their current printing press (it has stopped functioning), has a 10% cost of capital and all cash flows are after tax, which replacement press is the more appropriate as calculated by using the NPV approach
Hand-in Assignment Question 2:
ABC clothing company is considering opening three retail stores in Manchester. It requires a £600,000 initial investment and expects to make £120,000 per year in the first four years and £240,000 every year for the following three years.
Complete the following:
• What is the payback period?
• One of the disadvantages of the payback method is that the time value of money is not considered when you calculate the payback period.
Please read the article below:
http://bizfinance.about.com/od/Capital-Budgeting/a/discounted-payback-period.htm
If the discount rate is 8%, what is the discounted payback period?
-
Rating:
/5
Solution: accounting problems with all solutions-MedCo is a large manufacturing company and ABC clothing company is considering