Champion Bakers uses specialized ovens to bake its bread One oven costs 1000

Champion bakers uses specialized ovens to bake its

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Question 12: Champion Bakers uses specialized ovens to bake its bread. One oven costs $1000 and lasts about 2 years before it needs to be replaced. The annual operating cost per oven is $50. The required rate of return is 10%. Ignore taxes. What is the equivalent annual cost (EAC) of an oven approximately? Question 13: We are considering the purchase of a $200,000 computer-based inventory management system. It will be depreciated straight-line to zero over its four-year life. It will be worth $30,000 at the end of that time. The system will save us $60,000 before taxes in inventory-related costs. Because the new setup is more efficient than our existing one, we will be able to carry less total inventory and thus free up $45,000 in net working capital. The relevant tax rate is 39 percent. What is the NPV at 16 percent? What is the IRR on this investment?
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