Assignment:
Complete the following numbered problems using an Excel spreadsheet. You must show your work to get full credit.
- B&J Manufacturing is planning on purchasing a new assembly machine for $40,000 to automate one of its current manufacturing operations. It will cost an additional $3,000 to have the new machine installed. With the new machine, B&J expects to save $15,000 in annual operating and maintenance costs. The machine will last 5 years with an expected salvage value of $6,000. How long will it take to recover the investment (plus installation cost)?
- Consider the following investment projects, all with a five-year investment life:
n A B C D
0 $-1000 $-2000 -$1000 $-6500
1 $0 $800 -$1500 $3000
2 $0 $1100 $1000 $2000
3 $4000 $2000 $3500 $3000
Compute the net present worth of each project at i=8%.
- Consider the following set of investment projects, each with a four-year investment life:
n A B C D
0 $-5000 $-2000 $5000 $-4500
1 $6000 $-4500 -$700 $1250
2 $2500 $6000 $3000 $5250
3 $8500 $4000 $4500 $6500
Compute the net future worth of each project at i=15%.
- Consider the following cash flow data for two competing investment projects:
n A B
0 $-1,250,000 $-1,750,000
1 $825,000 $825,000
2 $825,000 $1,250,000
At i=10%, which of the two projects would be a better choice?
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