# What initial cost of machine D will make the IRR for the two machines equal?

Words: 529
Pages: 2
Subject: Finance

Question 110 pts
What is the capital recovery cost for a machine costing \$604,800 with a life of 12 years and a salvage value of 14% of the initial cost? The rate used by the firm is 10% per year compounded weekly.

\$73,871

\$74,706

\$87,136

\$108,748

Flag question: Question 2
Question 210 pts
What is the initial cost of a machine with a life of 8 years that has a salvage value of \$99,500 and a capital recovery cost of \$65,000 per year? The firm uses a rate of 7% per year compounded quarterly.

\$333,745

\$442,465

\$567,937

\$719,566

Flag question: Question 3
Question 310 pts
What is the NPW for a machine with the following details:

APR (Nom / y) 9% p y c m
Initial cost (\$175,000)
Salvage value 14% of initial value
First year cost (\$62,000)
Increase in cost 4% p y
First year revenue \$90,000
Increase in revenue 8% p y
Life of machine 10 years

\$93,398

\$156,135

\$233,578

\$325,750

Flag question: Question 4
Question 410 pts
What is the FW of a machine with the following details:

APR (Nom / y) 8% p y c d
Initial cost (\$175,000)
Salvage value 26% of initial value
First year cost (\$66,000)
Increase in cost 4% p y
First year revenue \$95,000
Increase in revenue 9% p y
Life of machine 10 years

\$52,629

\$153,152

\$306,747

\$526,723

Flag question: Question 5
Question 510 pts
What is the IRR for a machine with the following details?

APR (Nom / y) 7% p y c w
Initial cost (\$325,000)
Salvage value 8% of initial value
First year cost (\$99,000)
Increase in cost 7% p y
First year revenue \$130,000
Increase in revenue 11% p y
Life of machine 15 years

11.64%

17.52%

22.20%

26.24%

Flag question: Question 6
Question 610 pts
What is the FW for a machine with the following details:

APR (Nom / y) 11% p y c d
Initial cost (\$375,000)
Salvage value 16% of purchase value
First year cost (\$106,000)
Inflation (all costs) 5.50% p y
First year revenue \$175,000
Increase in revenue 12% p y
Life of machine 5 years
Life of project 20 years

\$874,583

\$2,422,461

\$5,315,356

\$10,194,603

Flag question: Question 7
Question 710 pts
What is the IRR for a machine with the following details?

APR (Nom / y) 9% p y c d
Initial cost (\$475,000)
Salvage value 20% of purchase value
First year cost (\$106,000)
Inflation (all costs) 6.50% p y
First year revenue \$195,000
Increase in revenue 11% p y
Life of machine 5 years
Life of project 20 years

7.00%

13.26%

18.45%

22.96%

Flag question: Question 8
Question 810 pts
What initial cost of machine D will make the IRR for the two machines equal?

Cost of Machine C (\$625,000) Cost of Machine D (\$900,000)
Salvage value 17% of purchase value Salvage value 19% of purchase value
First year cost (\$85,000) First year cost (\$102,000)
Inflation (all costs) 3.00% p y Inflation (all costs) 3.50% p y
First year revenue \$190,000 First year revenue \$215,000
Increase in revenue 4% p y Increase in revenue 6% p y
Life of machine 5 years Life of machine 5 years
Life of project 20 years Life of project 20 years

\$479,095

\$770,040

\$730,419

\$1,961,354

Flag question: Question 9
Question 910 pts
Which graph shows the net present worth of Project X at various rates of interest from 0% to 50%? The file with the graphs is attached here:Quiz 5-9.pptx

Years Project X
0 (\$770,040)
1 (\$347,490)
2 \$143,612
3 \$143,612
4 \$143,612
5 \$143,612
6 \$168,239
7 \$168,239
8 \$365,479
9 \$218,287
10 \$229,202

Graph 1

Graph 2

Graph 3

Graph 4

Flag question: Question 10
Question 1010 pts
For what finance rate, will the two projects have the same MIRR?

Finance rate 5.00% Years Project E Project F
Reinvest rate 8.0% 0 (\$575,000) (\$1,345,000)
1 \$155,000 \$173,000
2 \$155,000 \$173,000
3 \$155,000 \$173,000
4 \$155,000 \$173,000
5 (\$575,000) \$173,000
6 \$172,000 \$173,000
7 \$172,000 \$173,000
8 \$172,000 \$173,000
9 \$172,000 \$173,000
10 \$172,000 \$173,000