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Author Question: Miami Marine Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of ... (Read 150 times)

maychende

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Miami Marine Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair.  The company has narrowed their choices down to two: the B14 Model and the F54 Model.  Financial data about the two choices follows:

B14 ModelF54 Model
Investment $320,000 $240,000
Useful life (years)88
Estimated annual net cash inflows for useful life $75,000 $40,000
Residual value $30,000 $10,000
Depreciation methodStraight-lineStraight-line
Required rate of return14%10%


The present value of future cash inflows from the F54 Model is closest to
◦ $(21,930).
◦ $190,230.
◦ $218,070.
◦ $213,400.


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Marked as best answer by maychende on Jan 5, 2020

Li Jun

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jace

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Miami Marine Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair.  The company has narrowed their choices down to two: the B14 Model and the F54 Model.  Financial data about the two choices follows:

B14 ModelF54 Model
Investment $320,000 $240,000
Useful life (years)88
Estimated annual net cash inflows for useful life $75,000 $40,000
Residual value $30,000 $10,000
Depreciation methodStraight-lineStraight-line
Required rate of return14%10%


The present value of future cash inflows from the B14 Model is closest to
◦ $218,070.
◦ $410,655.
◦ $358,455.
◦ $38,455.




xclash

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Miami Marine Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair.  The company has narrowed their choices down to two: the B14 Model and the F54 Model.  Financial data about the two choices follows:

B14 ModelF54 Model
Investment $320,000 $240,000
Useful life (years)88
Estimated annual net cash inflows for useful life $75,000 $40,000
Residual value $30,000 $10,000
Depreciation methodStraight-lineStraight-line
Required rate of return14%10%


Using the net present value model, which alternative should Miami Marine Enterprises select?
◦ The F54 Model should be selected.
◦ The B14 Model should be selected.
◦ Both investments should be selected.
◦ Neither investment should be selected.



joewallace

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