Question
In: Finance
Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $61,372.00...
Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $61,372.00 seven years ago. The old equipment currently has no market value. The new equipment cost $84,355.00 . The new equipment will be depreciated to zero using straight-line depreciation for the four-year life of the project. At the end of the project the equipment is expected to have a salvage value of $12,497.00 . The new equipment is expected to save the firm $30,152.00 annually by increasing efficiency and cost savings. The corporation has tax rate of 34.88% and a required return on capital of 9.26% .
a) What is the total initial cash outflow? (show as negative number -
b) What are the estimated annual operating cash flows?
c) What is the terminal cash flow?
d) What is the NPV for this project?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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