Question
In: Finance
5) Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase...
5) Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball for $110,000 and sell its old low-pressure glueball, which is fully depreciated, for $20,000. The new equipment has a 10-year useful life and will save $24,000 a year in expenses. The opportunity cost of capital is 10%, and the firm’s tax rate is 21%. What is the equivalent annual saving from the purchase if Gluon can depreciate 100% of the investment immediately. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the...
Gluon Inc. is considering the purchase of a new high pressure
glueball. It can purchase the glueball for $110,000 and sell its
old low-pressure glueball, which is fully depreciated, for $20,000.
The new equipment has a 10-year useful life and will save $24,000 a
year in expenses. The opportunity cost of capital is 10%, and the
firm’s tax rate is 21%. What is the equivalent annual saving from
the purchase if Gluon can depreciate 100% of the investment
immediately. (Do...
Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the...
Gluon Inc. is considering the purchase of a new high pressure
glueball. It can purchase the glueball for $60,000 and sell its old
low-pressure glueball, which is fully depreciated, for $10,000. The
new equipment has a 10-year useful life and will save $14,000 a
year in expenses. The opportunity cost of capital is 11%, and the
firm’s tax rate is 21%. What is the equivalent annual saving from
the purchase if Gluon can depreciate 100% of the investment
immediately. (Do...
Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the...
Gluon Inc. is considering the purchase of a new high pressure
glueball. It can purchase the glueball for $60,000 and sell its old
low-pressure glueball, which is fully depreciated, for $10,000. The
new equipment has a 10-year useful life and will save $14,000 a
year in expenses. The opportunity cost of capital is 11%, and the
firm’s tax rate is 21%. What is the equivalent annual saving from
the purchase if Gluon can depreciate 100% of the investment
immediately. (Do...
Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the...
Gluon Inc. is considering the purchase of a new high pressure
glueball. It can purchase the glueball for $60,000 and sell its old
low-pressure glueball, which is fully depreciated, for $10,000. The
new equipment has a 10-year useful life and will save $14,000 a
year in expenses. The opportunity cost of capital is 11%, and the
firm’s tax rate is 40%. What is the equivalent annual savings from
the purchase if Gluon uses straight-line depreciation? Assume the
new machine will...
Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the...
Gluon Inc. is considering the purchase of a new high pressure
glueball. It can purchase the glueball for $20,000 and sell its old
low-pressure glueball, which is fully depreciated, for $3,000. The
new equipment has a 10-year useful life and will save $5,000 a year
in expenses. The opportunity cost of capital is 12%, and the firm’s
tax rate is 21%. What is the equivalent annual saving from the
purchase if Gluon can depreciate 100% of the investment
immediately. (Do...
Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the...
Gluon Inc. is considering the purchase of a new high pressure
glueball. It can purchase the glueball for $180,000 and sell its
old low-pressure glueball, which is fully depreciated, for $32,000.
The new equipment has a 10-year useful life and will save $40,000 a
year in expenses. The opportunity cost of capital is 8%, and the
firm’s tax rate is 21%. What is the equivalent annual saving from
the purchase if Gluon can depreciate 100% of the investment
immediately. (Do...
Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the...
Gluon Inc. is considering the purchase of a new high pressure
glueball. It can purchase the glueball for $140,000 and sell its
old low-pressure glueball, which is fully depreciated, for $24,000.
The new equipment has a 10-year useful life and will save $32,000 a
year in expenses. The opportunity cost of capital is 8%, and the
firm’s tax rate is 21%. What is the equivalent annual saving from
the purchase if Gluon can depreciate 100% of the investment
immediately. (Do...
Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the...
Gluon Inc. is considering the purchase of a new high pressure
glueball. It can purchase the glueball for $160,000 and sell its
old low-pressure glueball, which is fully depreciated, for $28,000.
The new equipment has a 10-year useful life and will save $36,000 a
year in expenses. The opportunity cost of capital is 11%, and the
firm’s tax rate is 40%. What is the equivalent annual savings from
the purchase if Gluon uses straight-line depreciation? Assume the
new machine will...
Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the...
Gluon Inc. is
considering the purchase of a new high pressure glueball. It can
purchase the glueball for $20,000 and sell its old low-pressure
glueball, which is fully depreciated, for $3,000. The new equipment
has a 10-year useful life and will save $5,000 a year in expenses.
The opportunity cost of capital is 12%, and the firm’s tax rate is
21%. What is the equivalent annual saving from the purchase if
Gluon can depreciate 100% of the investment immediately.
(Do...
Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the...
Gluon Inc. is considering the purchase of a new high pressure
glueball. It can purchase the glueball for $130,000 and sell its
old low-pressure glueball, which is fully depreciated, for $22,000.
The new equipment has a 10-year useful life and will save $30,000 a
year in expenses. The opportunity cost of capital is 11%, and the
firm’s tax rate is 21%. What is the equivalent annual saving from
the purchase if Gluon can depreciate 100% of the investment
immediately. (Do...
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