Question
In: Finance
Due to expected increases in sales, the Target Copy Company is contemplating purchasing a new printing...
Due to expected increases in sales, the Target Copy Company is contemplating purchasing a new printing machine costing $ 370 . To accomodate the new sales, the company will need to purchase additional inventory of $ 25 , part of which will be financed by an increase in accounts payable of $ 14 . Target's corporate tax rate is 42 percent. What is the initial after-tax outlay for the new printing machine? Since this is a cash outlay, be sure to use the - sign when writing your answer. Do not use the $ symbol.
Solutions
Expert Solution
Initial after tax outlay =
-(Cost of machine + Increase in working capital )
=Where Increase in working capital= Increase in Inventory less Increase in accounts payable =25-14=11
Initial after tax outlay = -(370+11)=-381
jeff jeffy answered 2 years agoRelated Solutions
The Target Copy Company is contemplating the replacement of its old printing machine with a new...
The Target Copy Company is contemplating the replacement of its
old printing machine with a new model costing $ 715. The new
machine will operate for 3 years and then project will be shut down
and all equipment sold. The old machine, which originally cost $
518, has 2 years of depreciation remaining and a current book value
of 22% of the original cost. The old machine has a current market
value of $ 268 and should be worth $...
ABC Printing Corporation is considering purchasing a new printing machine. The following information relates to the...
ABC Printing Corporation is considering purchasing a new
printing machine. The following information relates to the proposed
machine: The proposed machine will be disposed at the end of its
usable life of four years at an estimated sale price of K800 000.
The machine has an original purchase price of K8 000 000,
installation cost of K500 000, and will be depreciated under the
five year WTA using the rates provided below. WTA Depreciation
Schedule Year Depreciation Rate 1 25%...
A company is considering purchasing new equipment. The purchase of the equipment is expected to...
A company is considering purchasing new equipment. The purchase
of the equipment is
expected to generate after tax
savings of $12,600 each year for 8 years. The company can
borrow money at 6%. Assume annual
compounding.
Determine the present value of
the future cash inflows.
Hint: the $12,600 are your annuity payments
Pooh Industries is contemplating purchasing a new machine that will significantly improve the efficiency of their...
Pooh Industries is contemplating purchasing a new machine that
will significantly improve the efficiency of their operations. To
date the company has spent $15,000 evaluating the machine to better
determine annual operating savings from using the machine. The new
machine would cost $800,000 and would be depreciated over an
expected life of 8 years to a $40,000 salvage value using the
straight-line method. Pooh forecasts that the new machine would
reduce operating expenses by $200,000 per year. The firm's marginal...
Pooh Industries is contemplating purchasing a new machine that will significantly improve the efficiency of their...
Pooh Industries is contemplating purchasing a new machine that
will significantly improve the efficiency of their operations. To
date the company has spent $15,000 evaluating the machine to better
determine annual operating savings from using the machine.
The new machine would cost $800,000 and would be depreciated
over an expected life of 8 years to a $40,000 salvage value using
the straight-line method. Pooh forecasts that the new machine would
reduce operating expenses by $200,000 per year. The firm's marginal...
MARC Printing Ltd. is considering the purchase of a new copy machine. The machine will cost...
MARC Printing Ltd. is considering the purchase of a new copy
machine. The machine will cost $90,000 plus $6,000 for shipping and
$4,000 for installation. The machine’s useful life is four years
and falls under the straight line depreciation (with no salvage
value). Operating of this printing machine requires additional
inventories of $32.000. On the other hand, $12.000 of the
inventories will be on account and receivable of the project. Will
be $5.000. MARC Ltd. forecasts that new machine will...
Two alternatives for purchasing a new printing machine (from providers A and B) are being considered...
Two alternatives for purchasing a new printing machine (from
providers A and B) are being considered for a production upgrade of
a printing facility. Alternative A has a life of 2 years, first
cost of $1200, annual reduction in maintenance cost (can be treated
as revenue in this cash flow) of $650, and salvage value after 2
years of $250. Alternative B has a life of 3 years, first cost of
$1650, annual reduction in maintenance cost of $790, and...
Two alternatives for purchasing a new printing machine (from providers A and B) are being considered...
Two alternatives for purchasing a new printing machine (from
providers A and B) are being considered for a production upgrade of
a printing facility. Alternative A has a life of 2 years, first
cost of $1200, annual reduction in maintenance cost (can be treated
as revenue in this cash flow) of $650, and salvage value after 2
years of $250. Alternative B has a life of 3 years, first cost of
$1650, annual reduction in maintenance cost of $790, and...
The non-profit University Hospital is contemplating purchasing a new blood gas machine at a cost of...
The non-profit University Hospital is contemplating purchasing a
new blood gas machine at a cost of $1,500,000. Useful life of this
machine is 10 years. The hospital currently serves 5,000 patients
per year, 40 percent of whom need blood gas analysis data as part
of the diagnostic tests. The blood samples are presently sent to a
private laboratory that charges $150 per sample. In-house variable
expenses are estimated to be $85 per sample if the hospital
purchases the analysis machine....
Direct Printing Company currently leases its only copy machine for $1,600 a month. The company is...
Direct Printing Company currently leases its only copy machine
for $1,600 a month. The company is considering replacing this
leasing agreement with a new contract that is entirely commission
based. Under the new agreement, Direct would pay a commission for
its printing at a rate of $ 10 for every 500 pages printed. The
company currently charges $0.19 per page to its customers. The
paper used in printing costs the company $ 0.01 per page and other
variable costs, including...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Journal Entries and Trial Balance Elite Realty acts as an agent in buying, selling, renting, and...
- In racket Assume that the elements of a list are indexed starting with 1. Write a...
- Describe System Development Life Cycle (SDLC) and how it is used.
- What symbolism do you find in the play,Oedipus?
- • Using the Scanner class to obtain input from the user. • Using printf to output...
- In each of the following situations, develop a tentative plan for the client. List the various...
- MARGI sells different types of wine. Customers place orders to the most popular “Summer Wine” at...
ADVERTISEMENT