Question
In: Finance
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order
to save operating costs. Operating costs with the current machine
are $67,000 per year; operating costs with the new machine are
expected to be $38,385 per year. The new machine will cost $154,000
and will last for five years, at which time it can be sold for
$3,000. The current machine will also last for five more years but
will not be worth anything at that time. It cost $44,000 four years
ago, but its current disposal value is only $4,000.
Assume the following two changes: 1) both machines will last for
six more years, 2) the salvage value of the new machine after six
years will be zero. If X Company replaces the current equipment,
what is the approximate internal rate of return [enter your answer
as .XX, so 1% would be .01]?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order
to save operating costs. Operating costs with the current machine
are $61,000 per year; operating costs with the new machine are
expected to be $41,000 per year. The new machine will cost $66,000
and will last for 6 years, at which time it can be sold for $4,500.
The current machine will also last for 6 more years but will have
zero salvage value. Its current disposal value is...
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order
to save operating costs. Operating costs with the current machine
are $67,000 per year; operating costs with the new machine are
expected to be $45,000 per year. The new machine will cost $74,000
and will last for 4 years, at which time it can be sold for $4,500.
The current machine will also last for 4 more years but will have
zero salvage value. Its current disposal value is...
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order
to save operating costs. Operating costs with the current machine
are $68,000 per year; operating costs with the new machine are
expected to be $42,000 per year. The new machine will cost $71,000
and will last for 5 years, at which time it can be sold for $4,000.
The current machine will also last for 5 more years but will have
zero salvage value. Its current disposal value is...
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order
to save operating costs. Operating costs with the current machine
are $70,000 per year; operating costs with the new machine are
expected to be $45,000 per year. The new machine will cost $66,000
and will last for 5 years, at which time it can be sold for $4,500.
The current machine will also last for 5 more years but will have
zero salvage value. Its current disposal value is...
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order
to save operating costs. Operating costs with the current machine
are $70,000 per year; operating costs with the new machine are
expected to be $45,000 per year. The new machine will cost $66,000
and will last for 5 years, at which time it can be sold for $4,500.
The current machine will also last for 5 more years but will have
zero salvage value. Its current disposal value is...
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order
to save operating costs. Operating costs with the current machine
are $64,000 per year; operating costs with the new machine are
expected to be $35,385 per year. The new machine will cost $154,000
and will last for five years, at which time it can be sold for
$2,500. The current machine will also last for five more years but
will not be worth anything at that time. It cost...
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order
to save operating costs. Operating costs with the current machine
are $64,000 per year; operating costs with the new machine are
expected to be $35,385 per year. The new machine will cost $156,000
and will last for four years, at which time it can be sold for
$1,000. The current machine will also last for four more years but
will not be worth anything at that time. It cost...
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order
to save operating costs. Operating costs with the current machine
are $60,000 per year; operating costs with the new machine are
expected to be $32,310 per year. The new machine will cost $154,000
and will last for four years, at which time it can be sold for
$1,000. The current machine will also last for four more years but
will not be worth anything at that time. It cost...
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order
to save operating costs. Operating costs with the current machine
are $68,000 per year; operating costs with the new machine are
expected to be $38,450 per year. The new machine will cost $156,000
and will last for five years, at which time it can be sold for
$3,000. The current machine will also last for five more years but
will not be worth anything at that time. It cost...
The great tech company is considering replacing one of its machines with a more efficient one....
The great tech company is considering replacing one of its
machines with a more efficient one. The old machine has a book
value of $60,000 and a remaining useful life of 5 years. It can
sell the old machine now for $ 265,000. The old machine is being
depreciated by 120,000 per year straight line. The new machine has
a purchase price of $ 1,175,000 an estimated useful life and 5
years MACRS class life and salvage value of $145,000....
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