Tool makers inc uses tool and die machines to produce

69. Tool Makers, Inc. uses tool and die machines to produce equipment for other firms. The
initial cost of one customized tool and die machine is $850,000. This machine costs $10,000 a
year to operate. Each machine has a life of 3 years before it is replaced. What is the equivalent
annual cost of this machine if the required return is 9%? (Round your answer to whole
dollars.)
70. Jackson & Sons uses packing machines to prepare its products for shipping. One machine
costs $136,000 and lasts about 4 years before it needs replaced. The operating cost per
machine is $6,000 a year. What is the equivalent annual cost of one packing machine if the
required rate of return is 12%? (Round your answer to whole dollars.)
71. Bruno's, Inc. is analyzing two machines to determine which one it should purchase. The
company requires a 14% rate of return and uses straight-line depreciation to a zero book
value. Machine A has a cost of $290,000, annual operating costs of $8,000, and a 3-year life.
Machine B costs $180,000, has annual operating costs of $12,000, and has a 2-year life.
Whichever machine is purchased will be replaced at the end of its useful life. Which machine
should Bruno's purchase and why? (Round your answer to whole dollars.)
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Chapter 06 - Making Capital Investment Decisions
72. Kay's Nautique is considering a project which will require additional inventory of
$128,000 and will also increase accounts payable by $45,000 as suppliers are willing to
finance part of these purchases. Accounts receivable are currently $80,000 and are expected to
increase by 10% if this project is accepted. What is the initial project cash flow needed for net
working capital?
73. Lottie's Boutique needs to maintain 20% of its sales in net working capital. Lottie's is
considering a 3-year project which will increase sales from their current level of $110,000 to
$130,000 the first year and $145,000 a year for the following two years. What amount should
be included in the project analysis for the last year of the project in regards to the net working
capital?