Question

In: Finance

Mystic Beverage Company is considering purchasing a new bottling machine. The new machine costs $165,124, plus...

Mystic Beverage Company is considering purchasing a new bottling machine. The new machine costs $165,124, plus installation fees of $13,539 and will generate earning before interest and taxes of $84,143 per year over its 6-year life. The machine will be depreciated on a straight-line basis over its 6-year life to an estimated salvage value of 0. Mystic’s marginal tax rate is 0%. Mystic will require $27,354 in NWC if the machine is purchased. Determine the annual cash flow in year 3 if the machine is purchased. round your answer to two decimals

Solutions

Expert Solution

I

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Your company is considering purchasing a new bottling machine for the line that manufactures juice products....
Your company is considering purchasing a new bottling machine for the line that manufactures juice products. This Swill Fill 2000 is forecast to last for five years and will cost $42,000 to purchase. The new machine will offer labor savings of $4,500 annually through faster changeovers and will save you $5,000 per year in maintenance costs vs. your existing machine. The existing machine does not exhibit unusual wear-and-tear and should be able to go for another five years as well....
Dunder Mifflin Paper Company is considering purchasing a new stamping machine that costs ​$450,000. This new...
Dunder Mifflin Paper Company is considering purchasing a new stamping machine that costs ​$450,000. This new machine will produce cash inflows of $150,000 each year at the end of years 1 through​ 5, then at the end of year 7 there will be a cash outflow of $200,000 The company has a weighted average cost of capital of 14 percent​ (use this as the reinvestment​ rate). What is the MIRR of the​ investment?
A firm is considering replacing an old machine with another. The new machine costs $100,000 plus...
A firm is considering replacing an old machine with another. The new machine costs $100,000 plus $10,000 to install. Assume a 30 percent ordinary tax rate. The asset was purchased for $80,000 3 years ago and has a book value (undepreciated value) of $20,000. (a) The asset is sold for $50,000. (b) The asset is sold for $30,000. (c) The asset is sold for $20,000, (d) The asset is sold for $5,000. For each case given, calculate the initial investment...
Nuff Folding Box Company, Inc. is considering purchasing a new gluing machine. The gluing machine costs...
Nuff Folding Box Company, Inc. is considering purchasing a new gluing machine. The gluing machine costs $50,000 and requires installation costs of $2,500. This outlay would be partially offset by the sale of an existing gluer. The existing gluer originally cost $10,000 and is four years old. It is being depreciated under MACRS using a five-year recovery schedule and can currently be sold for $15,000. The existing gluer has a remaining useful life of five years. If held until year...
Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost...
Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $228,168 and has an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $33,500. Management also believes that the new bottling machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 5%....
Michener Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost...
Michener Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $170,000 and has an estimated useful life of eight years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $31,000. Management also believes that the new machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. Assume a discount rate of 10%. Click...
Rocky Mountain Sports Ltd is considering purchasing a new machine that costs $60,000. The machine will...
Rocky Mountain Sports Ltd is considering purchasing a new machine that costs $60,000. The machine will generate revenues of $100,000 per year for five years. The cost of materials and labour needed to generate these revenues will total $60,000 per year, and other cash expenses will be $10,000 per year. The machine is expected to sell for $2,500 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Rocky Mountain’s...
Rocky Mountain Sports Ltd is considering purchasing a new machine that costs $60,000. The machine will...
Rocky Mountain Sports Ltd is considering purchasing a new machine that costs $60,000. The machine will generate revenues of $100,000 per year for five years. The cost of materials and labour needed to generate these revenues will total $60,000 per year, and other cash expenses will be $10,000 per year. The machine is expected to sell for $2,500 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Rocky Mountain’s...
The ABC Corporation is considering the purchase of a new bottling machine for its wine bottling...
The ABC Corporation is considering the purchase of a new bottling machine for its wine bottling line. The bottling machine will cost $30,500. The maintenance and operating costs will amount to $1,300 for the first year. The maintenance and operating costs can be expected to increase $3,000 for each year that the bottling machine is used. The salvage value of the bottling machine, at any time that it is removed from service, will be the bottling machine's scrap value ($1,000)....
A company is considering purchasing a new machine that would cost $60,000 and the machine would...
A company is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its four year life. At the end of four years it is believed that the machine could be sold for $12,000. The machine would increase EBDT by $42,000 annually. the company's marginal tax rate is 34%. What the RATFCF’s associated with the purchase of this machine? $31,800 $32,820 $30,452 $29,940
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT