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Instructions:
Assignment on Waterways Study Questions
You will use what you learned in the unit lesson and the relevant unit materials to complete this assignment. Waterways (WP27) is a case study that can be found on pages 27-35 of the textbook.
When it comes to capital investments, Waterways places a strong emphasis on cash flow. The corporation decided on an 8% discount rate based on the rate of return it must pay its shareholders and creditors. Waterways then employs several methodologies to calculate the appropriate capital outlay decisions based on that rate.
Waterways is considering purchasing five new backhoes this year to replace the ones it currently has. The new backhoes are faster, less expensive to operate, deliver more precise trench digging, have operator comfort features, and come with one-year maintenance agreements. The antique backhoes are still functional, but they require a lot of attention. Backhoe operators are familiar with the old backhoes and will need to master new abilities in order to operate the new backhoes.
The following information can be used to help you decide whether or not to buy the new backhoes.
Information Backhoes, both old and new Purchase price when brand new $200,000 $90,000 $90,000 $90,000 $90,000 $ The salvage value has increased to $42,000. A $55,000 investment in a substantial refurbishment is required in the coming year. In 8 years, the salvage value will be $15,000 $90,000. 8 years left to live 8 years left to live 8 years left to live 8 years left to live 8 years left Each year, $30,425 in net cash flow is generated. $43,900
Instructions:
Determine whether new equipment should be purchased or old equipment should be overhauled using the procedures below. (Hint: The cost of the overhaul is the initial investment for the old equipment.) Subtract the salvage value of the old machine from the initial cost of the investment for the new machine.)
When deciding whether to acquire something new or keep something old, use the net present value method.
For each option, use the payback method. (Hint: Consider the cost of an overhaul for the old machine.)
For each option, compare the profitability index.
Comparing each option’s internal rate of return to the needed 8% discount rate.
Are there any intangible benefits or drawbacks that could sway your opinion?
What decision would you make, and why would you make it?
Fill out a Word document with your answers to these questions. The length of your paper should be at least two pages. You are not expected to use outside sources to support your work; however, if you do, use APA Style when establishing cites and references.
RUBRIC |
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Excellent Quality 95-100%
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Introduction
45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Literature Support 91-84 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met. |
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Average Score 50-85% |
40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided. |
83-76 points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration. |
52-49 points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met. |
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Poor Quality 0-45% |
37-1 points The background and/or significance are missing. No search history information is provided. |
75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration. |
48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met |
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Assignment on Waterways Study Questions |
Assignment on Waterways Study Questions