QUESTION

# 6.Riverbed Hammocks is considering the purchase of a new weaving machine to prepare fabric for its hammocks. The machine under consideration costs \$56,188 and will save the company \$8,000 in direct la

6.Riverbed Hammocks is considering the purchase of a new weaving machine to prepare fabric for its hammocks. The machine under consideration costs \$56,188 and will save the company \$8,000 in direct labor costs. It is expected to last 10 years.(a) Calculate the internal rate of return on the weaving machine. (Round answer to 0 decimal place, e.g. 15.)Internal rate of return enter the internal rate of return in percentages rounded to 0 decimal places %(b) If Riverbed uses a 9% hurdle rate, should the company invest in the machine?

7.Garrett Boone, Culver Enterprises’ vice president of operations, needs to replace an automatic lathe on the production line. The model he is considering has a sales price of \$309,543 and will last for 15 years. It will have no salvage value at the end of its useful life. Garrett estimates the new lathe will reduce raw materials scrap by \$35,000 per year. He also believes the lathe will reduce energy costs by \$5,000 per year. If he purchases the new lathe, he will be able to sell the old lathe for \$5,300.(a) Calculate the lathe’s internal rate of return. (Round answer to 0 decimal places, e.g. 25%.)Internal rate of return enter the internal rate of return in percentages rounded to 0 decimal places%(b) If Culver Enterprises uses a 8% hurdle rate, should Garrett purchase the lathe?select an option                                                           Yes  or No?(c) Without doing any calculations, what do you know about the lathe’s net present value?Net present value will be                                                            less than \$   0equal to \$0    greater than \$0.

8.Novak’s Accounting Museum is exploring the purchase of a new building with a useful life of 18 years to use as its main gallery space. The building will cost \$1,373,400. Once it has been purchased, the museum will terminate its current lease, which costs \$65,800 per year. The new gallery will allow the museum to display more of its permanent collection, as well as to showcase traveling exhibits. The increased exhibit space, along with the new building’s location, is expected to increase admissions revenue by \$32,300 per year.Calculate the payback period for the proposed investment in the building. Assume that all cash flows occur evenly throughout the year.Payback period enter the payback period in years years

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