In: Accounting

# "A firm is considering purchasing a new milling machine and has collected the following information for...

"A firm is considering purchasing a new milling machine and has collected the following information for its income statement and cash flow statement. However, this income statement was calculated as if there is no inflation! All dollars are expressed in constant (year-0) dollars. Recalculate the income and cash flow statement by assuming there is a general (average) inflation of 4.7% applied to revenue, O&M, and salvage value.
- The firm will pay back the loan in 2 years, and the annual loan payment is $15,796. - The tax rate is 39%. - The revenue for year 1 is$36,000 and $27,000 for year 2. - O&M for year 1 is$12,000 and $13,500 for year 2. - The interest paid on the debt is$2427 for year 1 and $1264 for year 2. - The taxable income is$12,713 for year 1 and $4,644 for year 2. - The income taxes are$4,958 for year 1 and $1,811 for year 2. - The milling machine costs$62,000.
##### 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%...
##### Subang Folding Box Berhad is considering purchasing a new gluing machine. The gluing machine costs RM50,000...
Subang Folding Box Berhad is considering purchasing a new gluing machine. The gluing machine costs RM50,000 and requires installation costs of RM2,500. This outlay would be partially offset by the sale of an existing gluer. The existing gluer originally cost RM30,000 and is four years old. It is being depreciated under straight line method and can currently be sold for RM15,000. The existing gluer has a remaining useful life of two years. If held until year six, the existing machine's...
##### A firm is considering an investment in a new machine with a price of $18.06 million... A firm is considering an investment in a new machine with a price of$18.06 million to replace its existing machine. The current machine has a book value of $6.06 million and a market value of$4.56 million. The new machine is expected to have a four-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $6.76 million in... ##### A firm is considering an investment in a new machine with a price of$18.06 million...
A firm is considering an investment in a new machine with a price of $18.06 million to replace its existing machine. The current machine has a book value of$6.06 million and a market value of $4.56 million. The new machine is expected to have a four-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save$6.76 million in...