Question
In: Accounting
"Your company has asked you to consider the purchase of a new machine for a project....
"Your company has asked you to consider the purchase of a new
machine for a project. Details of this potential purchase are
provided below.
-The project life is 3 years.
The machine costs $187,000.
* You have decided your company will pay cash for half of this
machine immediately, and will borrow the remaining half at 5%
annual rate compounded annually over 3 years.
* The machine will be depreciated using a seven year MACRS
approach.
Annual O&M costs (expenses) of the machine are $20,000.
Annual labor savings (revenues) are $84,000.
Salvage value at the end of year 3 will be $42,000.
Working capital requirement is initially $28,000. Any investment in
working capital will be recovered at the end of the project.
Assume an income tax rate and gains tax rate of 21%.
Find the NPW of this project based on a MARR of 14%."
Solutions
Expert Solution
- Find Table showing Net Present value of this Project:
ekkarill92 answered 1 year agoRelated Solutions
"Your company has asked you to consider the purchase of a new machine for a project....
"Your company has asked you to consider the purchase of a new
machine for a project. Details of this potential purchase are
provided below.
-The project life is 3 years.
The machine costs $187,000.
* You have decided your company will pay cash for half of this
machine immediately, and will borrow the remaining half at 5%
annual rate compounded annually over 3 years.
* The machine will be depreciated using a seven year MACRS
approach.
Annual O&M costs (expenses)...
"You are considering the purchase of a new machine for a project. Details of this potential...
"You are considering the purchase of a new machine for a
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will pay cash for half of this machine immediately, and will borrow
the remaining half at 5.6% annual rate compounded annually over 3
years. * The machine will be depreciated using a seven year MACRS
approach. Annual O&M costs (expenses) of the machine are
$22,000. Annual labor savings...
"You are considering the purchase of a new machine for a project. Details of this potential...
"You are considering the purchase of a new machine for a
project. Details of this potential purchase are provided below.
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will pay cash for half of this machine immediately, and will borrow
the remaining half at 9.3% annual rate compounded annually over 3
years. * The machine will be depreciated using a seven year MACRS
approach. Annual O&M costs (expenses) of the machine are
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"You are considering the purchase of a new machine for a project. Details of this potential...
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project. Details of this potential purchase are provided
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The machine costs $238,000.
* You will pay cash for half of this machine immediately, and will
borrow the remaining half at 9.3% annual rate compounded annually
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* The machine will be depreciated using a seven year MACRS
approach.
Annual O&M costs (expenses) of the machine are $18,000.
Annual labor savings...
"You are considering the purchase of a new machine for a project. Details of this potential...
"You are considering the purchase of a new machine for a
project. Details of this potential purchase are provided
below.
-The project life is 3 years.
The machine costs $210,000.
* You will pay cash for half of this machine immediately, and will
borrow the remaining half at 9.4% annual rate compounded annually
over 3 years.
* The machine will be depreciated using a seven year MACRS
approach.
Annual O&M costs (expenses) of the machine are $25,000.
Annual labor savings...
"You are considering the purchase of a new machine for a project. Details of this potential...
"You are considering the purchase of a new machine for a
project. Details of this potential purchase are provided
below.
-The project life is 3 years.
The machine costs $210,000.
* You will pay cash for half of this machine immediately, and will
borrow the remaining half at 9.4% annual rate compounded annually
over 3 years.
* The machine will be depreciated using a seven year MACRS
approach.
Annual O&M costs (expenses) of the machine are $25,000.
Annual labor savings...
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a new chromatograph for the firm's R&D department. The
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