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Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for...
Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for 20,800 dollars. It would be depreciated straight-line to 1,200 dollars over 2 years. In 2 years, the oven would be sold for an after-tax cash flow of 1,900 dollars. Without the new oven, costs are expected to be 10,400 dollars in 1 year and 17,400 in 2 years. With the new oven, costs are expected to be -3,800 dollars in 1 year and 9,800 in 2 years. If the tax rate is 50 percent and the cost of capital is 6.28 percent, what is the net present value of the new oven project?
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jeff jeffy answered 1 year agoRelated Solutions
Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for...
Fairfax Pizza is considering buying a new oven. The new oven
would be purchased today for 17,600 dollars. It would be
depreciated straight-line to 1,200 dollars over 2 years. In 2
years, the oven would be sold for an after-tax cash flow of 1,700
dollars. Without the new oven, costs are expected to be 11,700
dollars in 1 year and 15,200 in 2 years. With the new oven, costs
are expected to be -500 dollars in 1 year and 9,300...
Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for...
Fairfax Pizza is considering buying a new oven. The new oven
would be purchased today for 14,000 dollars. It would be
depreciated straight-line to 1,400 dollars over 2 years. In 2
years, the oven would be sold for an after-tax cash flow of 2,600
dollars. Without the new oven, costs are expected to be 10,000
dollars in 1 year and 19,900 in 2 years. With the new oven, costs
are expected to be 1,500 dollars in 1 year and 17,100...
Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for...
Fairfax Pizza is considering buying a new oven. The new oven
would be purchased today for 19,400 dollars. It would be
depreciated straight-line to 1,400 dollars over 2 years. In 2
years, the oven would be sold for an after-tax cash flow of 2,200
dollars. Without the new oven, costs are expected to be 12,200
dollars in 1 year and 18,500 in 2 years. With the new oven, costs
are expected to be -1,600 dollars in 1 year and 14,400...
Fairfax Pizza is considering buying a new oven. The new oven would be purchased today for...
Fairfax Pizza is considering buying a new oven. The new oven
would be purchased today for 17,400 dollars. It would be
depreciated straight-line to 2,200 dollars over 2 years. In 2
years, the oven would be sold for an after-tax cash flow of 2,800
dollars. Without the new oven, costs are expected to be 13,700
dollars in 1 year and 15,400 in 2 years. With the new oven, costs
are expected to be 3,900 dollars in 1 year and 12,300...
Question 2: A. Fairfax Pizza is considering buying a new oven. The new oven would be...
Question 2:
A. Fairfax Pizza is considering buying a new oven. The new oven
would be purchased today for 21,000 dollars. It would be
depreciated straight-line to 1,400 dollars over 2 years. In 2
years, the oven would be sold for an after-tax cash flow of 2,500
dollars. Without the new oven, costs are expected to be 14,700
dollars in 1 year and 17,400 in 2 years. With the new oven, costs
are expected to be 1,800 dollars in 1...
Oxygen Optimization is considering buying a new purification system. The new system would be purchased today...
Oxygen Optimization is considering buying a new purification
system. The new system would be purchased today for 19,200 dollars.
It would be depreciated straight-line to 1,400 dollars over 2
years. In 2 years, the system would be sold and the after-tax cash
flow from capital spending in year 2 would be 2,000 dollars. The
system is expected to reduce costs by 6,600 dollars in year 1 and
by 14,700 dollars in year 2. If the tax rate is 50 percent...
Oxygen Optimization is considering buying a new purification system. The new system would be purchased today...
Oxygen Optimization is considering buying a new purification
system. The new system would be purchased today for 18,400 dollars.
It would be depreciated straight-line to 1,000 dollars over 2
years. In 2 years, the system would be sold and the after-tax cash
flow from capital spending in year 2 would be 1,900 dollars. The
system is expected to reduce costs by 6,700 dollars in year 1 and
by 14,800 dollars in year 2. If the tax rate is 50 percent...
Oxygen Optimization is considering buying a new purification system. The new system would be purchased today...
Oxygen Optimization is considering buying a new purification
system. The new system would be purchased today for 16,200 dollars.
It would be depreciated straight-line to 2,000 dollars over 2
years. In 2 years, the system would be sold and the after-tax cash
flow from capital spending in year 2 would be 2,900 dollars. The
system is expected to reduce costs by 4,500 dollars in year 1 and
by 12,200 dollars in year 2. If the tax rate is 50 percent...
Assume it costs $11,000 for a new pizza oven. You expect the new pizza oven to...
Assume it costs $11,000 for a new pizza oven. You expect the new
pizza oven to provide $2,000 each year in net income for 8 years.
Should you invest in the pizza oven if you have a required rate of
return of 12%.
-Does it seem likely the pizza oven would only last 8 years?
-What if it lasts 15 years?
. Grotto’s is considering purchasing a new pizza oven and the choices are: Middleby Marshall vs...
. Grotto’s is considering purchasing a new pizza oven and the
choices are: Middleby Marshall vs Blodgett. The following are the
costs and incremental cash flows from each in 3 years:
Years
Middleby
Marshall
Blodgett
0
-$15,000
-$19,000
1
$10,400
$12,700
2
$ 5,900
$ 6,100
3
$ 2,100
$ 5,300
a) If the company’s required
payback is 2 years, which of these two ovens should be
accepted?
...
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