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Instructions
Use the net present value method to determine whether Hillsong
should purchase the new machine to replace the existing machine, and
state the reason for your conclusion.
E12-5
Bruno Corporation is involved in the business of injection molding of
plastics. It is considering the purchase of a new computer-aided design
and manufacturing machine for $430,000. The company believes that
with this new machine it will improve productivity and increase
quality, resulting in an increase in net annual cash flows of $101,000
for the next 6 years. Management requires a 10% rate of return on all
new investments.
Instructions
Calculate the internal rate of return on this new machine. Should the
investment be accepted?
E12-8
Pierre's Hair Salon is considering opening a new location in French
Lick, California. The cost of building a new salon is $300,000. A new
salon will normally generate annual revenues of $70,000, with annual
expenses (including depreciation) of $41,500. At the end of 15 years
the salon will have a salvage value of $80,000.
Instructions
Calculate the annual rate of return on the project.
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ACC 560 Week 8 Quiz 6 (Chapter 11)