Question
In: Accounting
You are considering the possibility of replacing an existing machine that has a book value of...
You are considering the possibility of replacing an existing machine that has a book value of $500,000, a remaining depreciable life of five years, and a salvage value of $300,000. The replacement machine will cost $2 million and have a 10-year life. Assuming that you use straight-line depreciation and that neither machine will have any salvage value at the end of the next 10 years, how much would you need to save each year to make the change (the tax rate is 40%)?
Please solve it on excel with formula!
10% discount rate
Solutions
ekkarill92 answered 2 years agoRelated Solutions
A company is considering replacing an existing machine (defender) with newer machine (challenger). If repaired, the...
A company is considering replacing an existing machine
(defender) with newer machine (challenger). If repaired, the
defender can be used for another 5 years. The current market value
of the defender is $8,200 (i.e., it can be sold now for $8,200).
The operating cost of the defender is $2,200 during the first year
which will increase 40% per year every year after the overhaul.
Future market values are expected to decline by 35% per year. The
new machine (challenger) has...
You are considering replacing a current machine with a new machine that has an 8-year life....
You are considering replacing a current machine with a new
machine that has an 8-year life. The purchase price of the new
machine is $635,000 and transportation/installation expenses will
be $100,000. This new machine falls into the 5-year MACRS
classification for depreciation purposes. At the end of that 8-year
life of the new machine, it is expected to have a market value of
$260,000. The current equipment has been in use for 7 years and has
an expected remaining life...
Top-Ten Inc. is considering replacing its existing machine that is used to produce musical CDs. This...
Top-Ten Inc. is considering replacing its existing machine that
is used to produce musical CDs. This existing machine was purchase
3 years ago at a base price of $50,000. Installation costs at the
time for the machine were $1,000. The existing machine is
considered a 3-year class for MACRS. The existing machine can be
sold today for $40,000 and for $10,000 in 3 years. The new machine
has a purchase price of $90,000 and is also considered a 3-year
class...
Bronson manufacturing is considering replacing an existing production line with a new line that has a...
Bronson manufacturing is considering replacing an existing
production line with a new line that has a greater output capacity
and operates with less labor than the existing line. The new line
would cost $1 million, have a five-year life, and be depreciated
using straight line method. At the end of five years, the new line
would be sold as scrap for $200,000 (in year 5 dollars). Because
the new line is more automated, it would require fewer operators,
resulting in...
ACME manufacturing is considering replacing an existing production line with a new line that has a...
ACME manufacturing is considering replacing an existing
production line with a new line that has a greater output capacity
and operates with less labour than the existing line. The new line
would cost $1 million, have a 5-year life, and would be depreciated
using the straight-line depreciation method over 5 years. At the
end of 5 years, the new line could be sold as scrap for $200 000
(in year 5 dollars). Because the new line is more automated, it...
ACME manufacturing is considering replacing an existing production line with a new line that has a...
ACME manufacturing is considering replacing an existing
production line with a new
line that has a greater output capacity and operates with less
labour than the existing
line. The new line would cost $1 million, have a 5-year life,
and would be depreciated
using the straight-line depreciation method over 5 years. At the
end of 5 years, the new
line could be sold as scrap for $200 000 (in year 5 dollars).
Because the new line is more
automated, it...
Relevant cash flows—No terminal value Central Laundry and Cleaners is considering replacing an existing piece of...
Relevant cash flows—No terminal value Central Laundry and
Cleaners is considering replacing an existing piece of machinery
with a more sophisticated machine. The old machine was purchased 3
years ago at a cost of $46,800, and this amount was being
depreciated under MACRS using a 5-year recovery period. The
machine has 5 years of usable life remaining. The new machine that
is being considered costs $75,900 and requires $3,600 in
installation costs. The new machine would be depreciated under
MACRS...
Relevant cash flows—No terminal value Central Laundry and Cleaners is considering replacing an existing piece of...
Relevant cash flows—No terminal value Central Laundry and
Cleaners is considering replacing an existing piece of machinery
with a more sophisticated machine. The old machine was purchased 3
years ago at a cost of $46,800, and this amount was being
depreciated under MACRS using a 5-year recovery period. The
machine has 5 years of usable life remaining. The new machine that
is being considered costs $75,900 and requires $3,600 in
installation costs. The new machine would be depreciated under
MACRS...
Relevant cash flows—No terminal value Central Laundry and Cleaners is considering replacing an existing piece of...
Relevant cash flows—No terminal value Central Laundry and
Cleaners is considering replacing an existing piece of machinery
with a more sophisticated machine. The old machine was purchased 3
years ago at a cost of $54,300, and this amount was being
depreciated under MACRS using a 5-year recovery period. The
machine has 5 years of usable life remaining. The new machine that
is being considered costs $76,200 and requires $4,200 in
installation costs. The new machine would be depreciated under
MACRS...
Relevant cash flows—No terminal value Central Laundry and Cleaners is considering replacing an existing piece of...
Relevant cash flows—No terminal value Central Laundry and
Cleaners is considering replacing an existing piece of machinery
with a more sophisticated machine. The old machine was purchased 3
years ago at a cost of $54,300, and this amount was being
depreciated under MACRS using a 5-year recovery period. The
machine has 5 years of usable life remaining. The new machine that
is being considered costs $76,200 and requires $4,200 in
installation costs. The new machine would be depreciated under
MACRS...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Convert the following numbers as indicated. Use as few digits in the results as necessary or...
- Java program to implement the merge sort your own and test it to sort a list...
- CODE IN C++ PLEASE Write a program to implement the algorithm that you designed in Exercise...
- Show your work please What is the discount yield, bond equivalent yield, and effective annual return...
- Case 7 of the textbook examines the rise of Wal-Mart as a corporate bohemoth. One of...
- The type of listening that involves trying to understand a situation from the speaker’s perspective is...
- Based on the loanable funds theory, explain how each of the following changes should impact interest...
ADVERTISEMENT