expected to generate $ 400,000 in annual cash flows for a period of fo ur years. The required rate of return is 12 %. The old machine can be sold for $ 50,000. The machine is expected to have zero value at the e nd of the four-year period. What is the net present value of the investment? Would the company want to purchase the new machine? Income taxes are not considered.( Points: 5)
22.( TCO 11) The four cost categories in a cost of quality program ar e( Points: 5) 23.( TCO 11) Regal Products has a budget of $ 900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $ 60,000 in variable costs. The new method will require $ 18,000 in training costs and $ 120,000 in annual equipment c osts. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 200, 000 units. Appraisal costs for the year are budgeted at $ 600,000. Th e new prevention procedures will save appraisal costs of $ 30,000. Int ernal failure costs average $ 15 per failed unit of finished goods. The internal failure rate is expected to be 3 % of all completed items. The proposed changes will cut the internal failure rate by onethird. Internal failure units are destroyed. External failure costs aver age $ 54 per failed unit. The company ' s average external failures aver age 3 % of units sold. The new proposal will reduce this rate by 50 %. Assume all units produced are sold and there are no ending inventori es. How much will internal failure costs change if the internal product fai lures are reduced by 50 % with the new procedures?( Points: 5)
24.( TCO 12) The costs associated with storage are an example of whi ch cost category?( Points: 5) 25.( TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 uni ts. The annual cost of carrying one unit in inventory is $ 1.60, and the cost to initiate a production run is $ 60. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the displ ay sets for the coming year, the first of which is to be run immediately