Question
In: Accounting
Hydro One is evaluating buying two different transforms. Ø Transformer #1: costs $370,000 has a 3 year...
Hydro One is evaluating buying two different transforms.
Ø Transformer #1: costs $370,000 has a 3 year life, has pre-tax operating cost of $80,000 per year.
Ø Transformer #2: costs $475,000 has a 5 year life, has pre-tax operating cost of $30,000 per year.
Ø Both transformers are Class 8 (CCA rate of 20% per year) and both have a savage value of $40,000.
The firm’s tax rate is 35% and discount rate is 10%
What is the NPV for Transformer #1?
What is the NPV for Transformer #2?
What is the EAC for Transformer #1?
What is the EAC for Transformer #2?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Hydro One is evaluating buying two different transforms. Ø Transformer #1: costs $370,000 has a 3 year...
Hydro One is evaluating buying two different transforms.
Ø Transformer #1: costs $370,000 has a 3 year life,
has pre-tax operating cost of $80,000 per year.
Ø Transformer #2: costs $475,000 has a 5 year life,
has pre-tax operating cost of $30,000 per year.
Ø Both transformers are Class 8 (CCA rate of 20% per
year) and both have a savage value of $40,000.
The firm’s tax rate is 35% and discount rate is 10%
What is the NPV for Transformer #2?
Select...
Hydro One is evaluating buying two different transforms. Ø Transformer #1: costs $370,000 has a 3 year...
Hydro One is evaluating buying two different transforms.
Ø Transformer #1: costs $370,000 has a 3 year life,
has pre-tax operating cost of $80,000 per year.
Ø Transformer #2: costs $475,000 has a 5 year life,
has pre-tax operating cost of $30,000 per year.
Ø Both transformers are Class 8 (CCA rate of 20% per
year) and both have a savage value of $40,000.
The firm’s tax rate is 35% and discount rate is 10%
1. What is the NPV for Transformer #1?...
Hydro One is evaluating buying two different transforms. Ø Transformer #1: costs $370,000 has a 3 year...
Hydro One is evaluating buying two different transforms.
Ø Transformer #1: costs $370,000 has a 3 year life,
has pre-tax operating cost of $80,000 per year.
Ø Transformer #2: costs $475,000 has a 5 year life,
has pre-tax operating cost of $30,000 per year.
Ø Both transformers are Class 8 (CCA rate of 20% per
year) and both have a savage value of $40,000.
The firm’s tax rate is 35% and discount rate is 10%
1. What is the NPV for Transformer #1?
You are evaluating two different silicon wafer milling machines. Machine I costs $120,000, has a 3-year...
You are evaluating two different silicon wafer milling machines.
Machine I costs $120,000, has a 3-year life, and has pretax
operating costs of $43,000 per year. Machine II costs $160,000, has
a 5-year life, and has pretax operating costs of $20,000 per year.
For both machines, use straight-line depreciation to zero over the
project's life and assume a salvage value of $20,000. If your tax
rate is 34 percent and your discount rate is 12 percent, which one
do you...
You are evaluating two different machines. Machine A costs $210,000, has a three-year life and has...
You are evaluating two different machines. Machine A costs
$210,000, has a three-year life and has pretax operating costs of
$30,000 per year. Machine B costs $320,000, has a five-year life
and has pretax operating costs of $23,000 per year. You will
depreciate both machines using straight-line depreciation to a zero
salvage value over the machine’s life. The expected salvage value
for each machine is $20,000. If your tax rate is 40%, both machines
are repeatable and your discount rate...
You are evaluating two different milling machines. The Techron I costs 210,000, has a three year...
You are evaluating two different milling machines. The Techron I
costs 210,000, has a three year life, and pretax operating costs of
34,000 per year. The Techron II costs 320,000, lasts five years,
and has pretax operating costs of 23,000 per year. Assume both
machines can be depreciated using the straight-line method and both
machines will have a salvage value of 20,000. The company tax rate
is 35% and the discount rate is 12%. Which machine should you
purchase?
You are evaluating two different stamping machines. The Stamper I costs $123053, has a three-year life,...
You are evaluating two different stamping machines.
The Stamper I costs $123053, has a three-year life, and has pretax
operating costs of $30,000 per year. The Stamper II costs $200,000,
has a five-year life, and has pretax operating costs of $45,000 per
year.
For both machines, use straight-line depreciation to zero over the
project’s life and assume a salvage value of $20,000. If your tax
rate is 35 percent and your discount rate is 10 percent, compute
the EAC for...
You are evaluating two different aluminum milling machines. The Alumina I costs $240,000, has a three-year...
You are evaluating two different aluminum milling machines. The
Alumina I costs $240,000, has a three-year life, and has pretax
operating costs of $63,000 per year. The Alumina II costs $420,000,
has a five-year life, and has pretax operating costs of $36,000 per
year. For both milling machines, use straight-line depreciation to
zero over the project's life and assume a salvage value of $40,000.
If your tax rate is 35 percent and your discount rate is 10
percent, which do...
1. You are evaluating two different silicon wafer millingmachines. The Techron I costs $320,000, has...
1. You are evaluating two different silicon wafer milling
machines. The Techron I costs $320,000, has a four-year life, and
has operating costs of $85,000 per year. The Techron II costs
$456,000, has a six-year life, and has operating costs of $46,000
per year. Assume a discount rate of 10 percent.What is the NPV (cost) of Techron II's cash flows?2. You are evaluating two different silicon wafer milling
machines. The Techron I costs $320,000, has a four-year life, and
has...
Scholastic Co. is evaluating different equipment. Machine A costs $85,000 has a four-year life, and costs...
Scholastic Co. is evaluating different equipment. Machine A
costs $85,000 has a four-year life, and costs $45,000 per year to
operate. The machine will be depreciated using straight-line and
the relevant discount rate is 8%. The machine will have a salvage
value of $20,000 at the end of the project's life. The firm has a
tax rate of 21%. Calculate the EAC for the project. (Enter a
positive value and round to 2 decimals)
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