Home / Questions / elp Norfolk State University is considering replacing some Xerox copiers with faster copie...
P11-51 (similar to) Question Help Norfolk State University is considering replacing some Xerox copiers with faster copiers purchased from Brother. The administration is very concemed about the rising costs of operations during the last decade Cick the icon to view the view information on the Xerox and Brother copiers) E(Cick the icon to view the present value factor table) E(Click the icon to view the present value annuity factor table.) Read the requirements Requirement 1. Using DCF techniques, compute the PV of all relevant cash flows, under both alternatives, for the 10-year period discounted at 10 %. As a nonprofit university, Norfolk State does not pay income taxes Begin by completing the NPV using the total project approach First, complete the "replace" option and then complete the "keep" option and calculate the difference in NPV between the alternatives. (Enter the present value factor to four decimal places, "XXXXX Round dollar amounts to the nearest whole number. Use a minus sign or parentheses for annual net cash outflows and for a negative net present value) Present Value of Ordinary Annuity of $1 Annual Cash Total Present at 10 years, 10 % Outflow Value A Replace Net present value: Present value of annuity of equal 6.1446 (85.850) per year annual net cash outflows S S (527,514) Less Initial investment (53,250) NPV of net cash flows (580,764) B Keep Net present value: NPV of annuity of equal annual net cash outflows (105240) per year 6.1446 (646658) Difference in NPV between the alternatives 65894 Enter any number in the edit fields and then click Check Answer parts remaining Clear All Check Answer V X More Info n To convert to Brother, two operators would have to be retrained. Required training and remodeling would cost $5.000. Norfolk State's three Xerox machines were purchased for $8,000 each, 5 years ago. Their expected life was 15 years. Their resale value now is $2,250 each and will be zero in 10 more years. The total cost of the new Brother equipment will be $55,000; it will have zero disposal value in 10 years The three Xerox operators are paid $16 an hour each. They usually work a 40-hour week of Machine breakdowns occur monthly on each machine, resulting in repair costs of $25 per month and overtime of 5 hours, at time-and-one-half, per machine per month, to complete the normal monthly workload. Toner, supplies, and so on, cost $75 a month for each Xerox copier The Brother system will require only two regular operators, on a regular work week of 40 hours each, to do the same work. Rates are $20 an hour, and no overtime is expected. Toner, supplies, and so on, will cost a total of $1,800 annually. Maintenance and repairs are fully serviced by Brother for $850 annually. (Assume a 52-week year.) Print Done Ows .1440 T05240) per year en - X i Data Table Present Value of $1 16% 18% 20% 25% 4% 5% 6% 7% 10% 12% 14% Period 3% 8% 9524 94349346 9259 9091 1 9709 9615 8772 8621 8475 8333 8000 8929 9426 9246 7182 6944 6400 2 9070 8900 8734 8573 8264 7972 7695 432 8890 3 9151 8638 8396 8163 7938 7513 7118 6750 6407 6086 5787 5120 4 8885 8548 8227 7921 7629 7350 6355 5921 5523 5158 4823 4096 6830 8626 5 8219 7835 7473 7130 6806 6209 5674 5194 4761 4371 4019 3277 8375 7903 7462 6 7050 6663 6302 5645 5066 4556 4104 3704 3349 2621 7 8131 7599 7107 6651 6227 5835 5132 4523 3996 3538 3139 2791 2097 7894 6768 7307 6274 5820 5403 4665 4039 3506 3050 2660 2326 1678 7664 7026 6446 5919 5439 5002 4241 3606 3075 .2630 2255 1938 1342 10 7441 6756 6139 5584 5083 4632 3855 3220 2697 2267 1911 1615 1074 12 7014 6246 5568 4970 4440 3971 3186 2567 2076 1685 1372 1122 .0687 15 6419 5553 4810 3624 4173 3152 2394 1827 1401 1079 0835 0649 0352 18 5874 4936 3503 2959 4155 2502 1799 1300 0946 0691 0508 0376 .0180 20 5537 4564 3769 3118 2584 2145 .1486 .1037 07280514 0365 .0261 0115 25 4776 3751 2953 2330 1842 1460 .0923 0588 0378 0245 0160 0105 .0038 28 4371 3335 2551 1956 1504 0419 0255 0157 00970061 0019 .1159 .0693 30 4120 3083 2314 1741 .0994 1314 .0573 .0334 0196 0116 0070 0042 0012 Print Done LO -X Data Table Present Value of Ordinary Annuity of $1 16% 18% 20% 25% Period 3% 4% 5% 6% 7% 8% 10% 12% 14% 8621 8475 8333 8000 9709 9615 9524 9434 9346 9259 9091 8929 8772 1.5278 14400 1.9135 1.8861 1.8594 1.7355 16901 1.6467 1.6052 1.5656 2 18334 1.8080 1.7833 2.1065 1.9520 2.5771 2.4869 2.4018 2.3216 2.2459 2.1743 3 2.8286 2.7751 2.7232 2.6730 2.6243 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.1699 3.0373 2.9137 2.7982 2.6901 2.5887 2.3616 4.3295 3.9927 3.7908 3.6048 34331 3.2743 3.1272 2.9906 26893 5 4.5797 4.4518 4.2124 4.1002 4.6229 4.3553 4.1114 3.8887 36847 34976 3.3255 2.9514 6 5.4172 5.2421 5.0757 4.9173 4.7665 5.3893 5.2064 4.8684 4.5638 4.2883 4.0386 3.8115 3.6046 3.1611 7 6.2303 6.0021 5.7864 5.5824 6.2098 5.9713 5.7466 5.3349 49676 4.6389 4.3436 4.0776 3.8372 3.3289 8 7.0197 6.7327 6.4632 7.1078 6.8017 65152 6.2469 5.7590 53282 4.9464 46065 4.3030 4.0310 34631 7.7861 7.4353 6.1446 56502 52161 4.8332 4.4941 7.7217 7.3601 7.0236 67101 4.1925 35705 10 8.5302 8.1109 6.8137 6.1944 5.6603 5.1971 4.7932 44392 3.7251 8.8633 8.3838 79427 7.5361 12 9.9540 9.3851 9.7122 9.1079 7.6061 68109 61422 55755 5.0916 8.5595 15 11.9379 11.1184 10.3797 4.6755 3.8593 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.2014 7.2497 6.4674 5.8178 5.2732 4.8122 3.9279 18 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 8.5136 7.4694 6.6231 5.9288 5.3527 4.8696 3.9539 20 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.0770 7.8431 6.8729 6.0971 5.4669 4.9476 3.9849 25 11.0511 28 18.7641 16.6631 14.8981 13.4062 12.1371 9.3066 7.9844 6.9607 6.1520 5.5016 4.9697 3.9923 30 19.6004 17.2920 15.3725 13.7648 124090 11.2578 4.9789 3.9950 9.4269 8.0552 7.0027 6.1772 5.5168 Print Done - X i Requirements 1. Using DCF techniques, compute the PV of all relevant cash flows, under both alternatives, for the 10-year period discounted at 10%. As a nonprofit university, Norfolk State does not pay income taxes 2. Should Norfolk State keep the Xerox copiers or replace them if the decision is based solely on the given data? 3. What other considerations might affect the decision? it nt S Print Done ual (646658)
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