Purchase Solution

Shirt Company purchase new cutting machine: maximum spend

Not what you're looking for?

Ask Custom Question

Shirt Company wants to purchase a new cutting machine for its sewing plant. The investment is expected to generate annual cash inflows of $300,000. The required rate of return is 12% and the current machine is expected to last for four years. What is the maximum dollar amount Shirt Company would be willing to spend for the machine, assuming its life is also four years? Income taxes are not considered.

a $507,000
b $720,600
c $791,740
d $911,100

Purchase this Solution
Solution Summary

The expert examines a shirt company purchasing a new cutting machine. Maximum spent is determined.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Operations Management

This quiz tests a student's knowledge about Operations Management

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

View More Free Quizzes
Related BrainMass Solutions

  • Net present value qualitative issues

    The ABC Company has two options: 1. Continue to operate the old machine, or 2. Sell the old machine and purchase the new machine. No trade-in was offered by the seller of the new machine.

  • Calculating bid price for shirts using NPV

    The company will require a new printing machine that will be able to print on the shirts. The new printing machine will cost $225,000 including installation and training costs of $17,000.

  • Multiple Choice

    Responding to a new rpcie of a competitor d. Determining whether to accept a price proposed by a company requesting a special order Bangkok Custom Shirt Company uses a special fabric in the production of dress shirts.

  • Providing Justification Using the Method of Cost-Volume Analysis

    The company is in the process making a major capital investment decision to purchase a new Flexible Manufacturing System (FMS). It is considering alternatives from 4 different vendors of FMS machines.

  • Expected Value of Sample Information

    A machine shop owner is attempting to decide whether to purchase a new drill press, a lathe, or a grinder. The return from each will be determined by whether the company succeeds in getting a government military contract.

  • A Collection of Investment Questions

    Smith Inc. is considering replacing an existing machine with a new machine that is more efficient.

  • Managerial Accounting Problems

    Should SRL purchase the new machine?

  • Managerial Accounting

    hrs pr job 10 10 Cost of printing machine ops

  • purchasing benefits of an Xray machine

    425211 Xray machine benefits are posed. Provide benefits for a healthcare organization's purchase of a new xray machine. Please provide the cost of the new machine and possible profits from the capital purchase.

View More Related Solutions