Question
In: Finance
Tech Engineering Company is considering the purchase of a new machine to replace an existing one....
Tech Engineering Company is considering the purchase of a new machine to replace an existing one. The old machine was purchased 5 years ago at a cost of $20,000, and it is being depreciated on a straight-line basis to a zero salvage value over a 10-year life. The current market value of the old machine is $14,000. The new machine, which falls into the MACRS 5-year class, has an estimated life of 5 years, it costs $30,000, and Tech plans to sell the machine at the end of the fifth year for $1,000. The applicable depreciation rates are 0.20, 0.32, 0.19, 0.12, 0.11, and 0.06. The new machine is expected to generate before-tax cash savings of $3,000 per year. The company's tax rate is 40%. What is the year 5 total (operating plus terminal) cash flow of the proposed project?
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
jeff jeffy answered 1 year agoRelated Solutions
Cushing Corporation is considering the purchase of a new grading machine to replace the existing one....
Cushing Corporation is considering the purchase of a new grading
machine to replace the existing one. The existing machine was
purchased 4 years ago at an installed cost of $ 20 comma 300; it
was being depreciated under MACRS using a 5-year recovery period.
(See table LOADING... for the applicable depreciation
percentages.) The existing machine is expected to have a usable
life of at least 5 more years. The new machine costs $ 35 comma 400
and requires $ 4...
The Oviedo Company is considering the purchase of a new machine to replace an obsolete one....
The Oviedo Company is considering the purchase of a new machine
to replace an obsolete one. The machine being used for the
operation has a book value and a market value of zero. However, the
machine is in good working order and will last at least another 10
years. The proposed replacement machine will perform the operation
so much more efficiently that Oviedo's engineers estimate that it
will produce after-tax cash flows (labor savings and depreciation)
of $9,000 per year....
. Topsider Inc. is considering the purchase of a new leather-cutting machine to replace an existing...
. Topsider Inc. is considering the purchase of a new
leather-cutting machine to replace an existing machine that has a
book value of $3,000 and can be sold for $1,500. The old machine is
being depreciated on a straight-line basis, and its estimated
salvage value 3 years from now is zero. The new machine will reduce
costs (before taxes) by $7,000 per year. The new machine has a
3-year life, it costs $14,000, and it can be sold for an...
• FIN Ltd is considering the purchase of a new photocopier to replace the existing one....
• FIN Ltd is considering the purchase of a new photocopier to
replace the existing one. The following information is
available.
• The total cost of the NEW is $16,000. The NEW is to be
depreciated using the straight-line method with an effective life
of 10 years.
• The OLD was purchased 5 years ago for $7500. When it was
purchased, the asset had an expected useful life of 15 years and an
estimated market value of zero at the...
Canal Company is contemplating the purchase of a new leather sewing machine to replace the existing...
Canal Company is contemplating the purchase of a new leather
sewing machine to replace the existing machine. The existing
machine was purchased four years ago at an installed cost of
$115,000; it was being depreciated under MACRS using a 5-year
recovery period. The existing machine is expected to have a useful
life of 5 more years. The new machine costs $203,000 and requires
$8,000 in installation costs; it has a five-year useable life and
would be depreciated under MACRS using...
The XYZ company is considering the purchase of a new machine to replace an out of...
The XYZ company is considering the purchase of a new machine to
replace an out of date machine that has a book value of $18000 and
can be sold today for $2,000. The old machine is being depreciated
on a straightline basis over 4 more years to a book value of $2000
at the end of the fourth year. The old machine generates annual
revenues of $105000 and annual expenses of $75000. This machine
requires a fixed investment of $5000...
eBook The Oviedo Company is considering the purchase of a new machine to replace an obsolete...
eBook
The Oviedo Company is considering the purchase of a new machine
to replace an obsolete one. The machine being used for the
operation has a book value and a market value of zero. However, the
machine is in good working order and will last at least another 10
years. The proposed replacement machine will perform the operation
so much more efficiently that Oviedo's engineers estimate that it
will produce an increase in after-tax cash flows (labor savings and
depreciation)...
A firm is considering the purchase of one of two machines to replace an existing one. MachineA...
A firm is considering the purchase of one of two
machines to replace an existing one. MachineA will cost GBP £18,000
and has a four-year life. Annual net cash flows are expected to be
GBP£7,200, beginning one year after the machine is purchased.
Machine B will cost GBP £26,000and has a six-year life. Annual net
cash flows are expected to be GBP £7,500, beginning oneyear after
the machine is purchased. Assume the firm's cost of capital is a
constant 15%forever, and...
J. Mourinho Transportation Company (JMTC) is considering the purchase of a new machine to replace the...
J. Mourinho Transportation Company
(JMTC) is considering the purchase of a new machine to replace the
existing one to increase the productivity of the company in order
to save the company from possible bankruptcy. The existing machine
has a book value of $3,000 and can be sold for $4,000 in the
market. The old machine is being depreciated on a straight-line
basis, and its estimated salvage value 3 years from now is zero.
The new machine will reduce costs (before...
J. Mourinho Transportation Company (JMTC) is considering the purchase of a new machine to replace the...
J. Mourinho Transportation Company (JMTC) is considering the
purchase of a new machine to replace the existing one to increase
the productivity of the company in order to save the company from
possible bankruptcy. The existing machine has a book value of
$3,000 and can be sold for $4,000 in the market. The old machine is
being depreciated on a straight-line basis, and its estimated
salvage value 3 years from now is zero. The new machine will reduce
costs (before...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Please answer these questions Data Processing and Analysis using python. Thank you In statistics, an outlier...
- Write a function file that accepts each of the four vectors as inputs. The function file...
- Kant says that to act morally is to act out of duty. How does this differ...
- Suppose you are trying to determine the capacity (in gallons) of the gas tank needed on...
- List the arithmetic operators used in BASIC and state their priorities of execution in a statement....
- Describe the espoused values of a company you have worked for (or been exposed to -...
- Can you explain to me the differnces in how we paid for the health care (access...
ADVERTISEMENT