You Are Given the Following Present Value Factors at 8

question 119

Essay

You are given the following present value factors at 8 percent,The Rogers Company's minimum desired rate of return:
The Rogers Company is considering the replacement of a piece of equipment.The old machine has a carrying value of $800 and a remaining estimated life of five years,with no residual value at that time.Present residual value is $200.The new equipment will cost $1,200,including transportation and installation.It has an estimated life of five years,with no residual value then.Annual cash operating costs are $400 for the old machine and $150 for the new machine.(Round your answers to two decimal places. )
a.Compute the present value of the operating cash outflows for the old machine.
b.Compute the present value of the operating cash outflows for the new machine.
c.Compute the present value of the cash operating savings if the new machine is purchased.
d.What is the net present value of the replacement alternative?

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Definitions:

Environmental Factors

Elements in the surrounding environment that can influence the development, behavior, and well-being of individuals or populations.

Sympathetic Activity

Part of the autonomic nervous system responsible for the body's 'fight or flight' response, regulating heart rate, blood pressure, and energy release.

General Adaptation Syndrome

The process of physiological stress response consisting of three stages: alarm, resistance, and exhaustion, described by Hans Selye.

Alarm Reaction Stage

The initial phase of the stress response, where the body mobilizes its resources to cope with a stressor, characterized by the activation of the sympathetic nervous system.