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ACC564 Case 14-40

# ACC564 Case 14-40 - Case 14-40 We will use the net present...

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Case 14-40 We will use the net present value formula to solve this case. Place your curser in the cell right under the year ten total Click on Formulas above Click on financial Click on NPV Enter the discount rate In ther Value one box, click on the red arrow to the right. Then highlight the ten totals , then hit enter. That is your answer, the present value of the future costs. Summary of NPV results Question 1 \$404,102 \$349,599 \$54,502 2 \$434,203 \$383,046 \$51,158 3 \$425,006 \$358,797 \$66,209 Model 2600 Model 5200 DM/unit 0.36 DM/unit 0.40 DL/unit 0.50 DL/unit 0.22 OVRHD/unit 0.04 OVRHD/unit 0.08 Total 0.90 Total 0.70 Question #1 ALTERNATIVE ONE ALTERNATIVE TWO Year Year Maintenance 1 \$180,000 20,000 \$18,000 \$6,000 \$204,000 1 \$250,000 20,000 \$14,000 \$4,600 \$268,600 2 30,000 \$27,000 \$6,000 \$33,000 2 30,000 \$21,000 \$4,600 \$25,600 3 40,000 \$36,000 \$6,000 \$42,000 3 40,000 \$28,000 \$4,600 \$32,600 4 45,000 \$40,500 \$6,000 \$46,500 4 45,000 \$31,500 \$4,600 \$36,100 5 45,000 \$40,500 \$6,000 \$46,500 5 45,000 \$31,500 \$4,600 \$36,100 6 \$200,000 45,000 \$40,500 \$6,000 \$246,500 6 45,000 \$31,500 \$4,600 \$36,100 7 45,000 \$40,500 \$6,000 \$46,500 7 45,000 \$31,500 \$4,600 \$36,100 8 45,000 \$40,500 \$6,000 \$46,500 8 45,000 \$31,500 \$4,600 \$36,100 9 45,000 \$40,500 \$6,000 \$46,500 9 45,000 \$31,500 \$4,600 \$36,100 10 45,000 \$40,500 \$6,000 \$46,500 10 45,000 \$31,500 \$4,600 \$36,100 \$404,102 NPV \$349,599 NPV Question #2 Direct material increase by 50% Year Year Maintenance 1 \$180,000 20,000 \$21,600 \$6,000 \$207,600 1 \$250,000 20,000 \$18,000 \$4,600 \$272,600 2 30,000 \$32,400 \$6,000 \$38,400 2 30,000 \$27,000 \$4,600 \$31,600 3 40,000 \$43,200 \$6,000 \$49,200 3 40,000 \$36,000 \$4,600 \$40,600 4 45,000 \$48,600 \$6,000 \$54,600 4 45,000 \$40,500 \$4,600 \$45,100 5 45,000 \$48,600 \$6,000 \$54,600
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