Question

In: Finance

Your company is considering the purchase of a new machine. After 4 years of operation, you...

Your company is considering the purchase of a new machine. After 4 years of operation, you would sell the machine for a salvage value of $71012. However, at that time the machine would not have been depreciated to a value of 0, but have a remnant book value of $19464. The operation of the machine requires additional NOWC of $36223, which would not change throughout the project. The firm's corporate tax rate is 40%. What is the project's Terminal Cash Flow?

Enter your answer in dollars, rounded to 2 decimals, without the dollar sing. So, if your answer is 12,345.6789, just enter 12345.68.

Solutions

Expert Solution

jeff jeffy answered 8 months ago
Next > < Previous

Related Solutions

Your company is considering the purchase of a new machine. After 4 years of operation, you...
Your company is considering the purchase of a new machine. After 4 years of operation, you would sell the machine for a salvage value of $46001. However, at that time the machine would not have been depreciated to a value of 0, but have a remnant book value of $19746. The operation of the machine requires additional NOWC of $31636, which would not change throughout the project. The firm's corporate tax rate is 40%. What is the project's Terminal Cash...
The ABC company is considering the purchase of a new machine that will last 5 years...
The ABC company is considering the purchase of a new machine that will last 5 years and cost $100,000; maintenance will cost $12,000 per year. If the interest rate is 10% per year, compounded quarterly,              a. how much money should the company set aside for this machine b. what is the future value, at the end of year 5, of the given cash flows
Company A is considering the purchase of a new machine. The new machine is not expected...
Company A is considering the purchase of a new machine. The new machine is not expected to affect revenues, but pretax operating expenses will be reduced by $12,700 per year for 10 years. The old machine is now 5 years old, with 10 years of its scheduled life remaining. It was originally purchased for $61,500 and has been depreciated by the straight-line method. The old machine can be sold for $20,700 today The new machine will be depreciated by the...
A company is considering the purchase of a new machine. The machine will cost $14,000, will...
A company is considering the purchase of a new machine. The machine will cost $14,000, will result in an annual savings of $1750 with a salvage value of $500 at the end of 12 years. For a MARR of 7%, what is the benefit to cost ratio? Question options: 0.63 8.25 1.36 1.01
A company is considering the purchase of a new machine that will enable it to increase...
A company is considering the purchase of a new machine that will enable it to increase its expected sales. The machine will have a price of $100,000. In addition, the machine must be installed and tested. The costs of installation and testing will amount to $10,000. The machine will be depreciated using 3-years MACRS. (Use MACRS table from class excel exercise by copying the table and pasting it) The equipment will be operated for 5 years. The sales in the...
Aurora Company is considering the purchase of a new machine. The invoice price of the machine...
Aurora Company is considering the purchase of a new machine. The invoice price of the machine is $123,000, freight charges are estimated to be $4,000, and installation costs are expected to be $5,000. Salvage value of the new equipment is expected to be zero after a useful life of 5 years. Existing equipment could be retained and used for an additional 5 years if the new machine is not purchased. At that time, the salvage value of the equipment would...
You would like to purchase a new car in 4 years after you graduate college. The...
You would like to purchase a new car in 4 years after you graduate college. The car you want to buy currently costs $35,000, but you expect the price of this model of car to increase by 5% per year for the next 4 years. How much do you have to invest today if you savings account earns 3% APR (nominal) to exactly pay for your new car? $421,657 $38,122 $42,543 $37,799 please work out and show how nominal rate...
Your company is considering replacing an old machine with a new machine. The new machine will...
Your company is considering replacing an old machine with a new machine. The new machine will cost $1 million, will last for 5 years, and will have a salvage value of $200,000 at the end of five years. If the company replaces the old machine with the new machine, pre-tax operating costs will go down by $300,000 per year. The cost of the new machine ($1 million) will be depreciated over the 5 years life of the project using the...
You are considering the purchase of a machine with an expected life of 3 years. It...
You are considering the purchase of a machine with an expected life of 3 years. It costs $800,000 and belongs to class 10 (CCA rate = 30%). Its estimated market value at the end of 3 years equals $125,000. The number of products you expect to sell over the next 3 years is 20,000, 25,000 and 20,000 in years 1, 2 and 3, respectively. Expected selling price per unit is $100 while annual production costs consist of $50,000 in fixed...
Simmons Company is considering the purchase price of a new floor machine. The purchase price of...
Simmons Company is considering the purchase price of a new floor machine. The purchase price of the equipment is $420,000 and it is expected to have a useful life of 7 years with no salvage value. The company uses straight line depreciation and pays income taxes at a rate of 25%. If the company requires that all new equipment investments pay for themselves within 3 years, how much annual cash operating savings must the floor machine generate, if it is...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT