Question
In: Finance
You are considering replacing a five-year-old machine that originally cost $50,000. It was being depreciated using...
You are considering replacing a five-year-old machine that
originally cost $50,000. It was being depreciated using
straight-line to an expected salvage value of zero over its
original 10-year life and could now be sold for $40,000. The
replacement machine would cost $190,000 and have a five-year
expected life. It would be depreciated using the MACRS 5-year class
life. The actual expected salvage value of this machine after five
years is $20,000. The new machine is expected to operate much more
efficiently, saving $6,000 per year in energy costs. In addition,
it will eliminate one salaried position saving another $54,000
annually. The firm’s marginal tax rate is 35% and the WACC is
7.5%.
a. Set up an operating cash flow statement, and
calculate the payback, discounted payback, NPV, IRR, and MIRR of
the replacement project. Should the project be accepted?
*Use excel cell reference and display the formulas
Solutions
jeff jeffy answered 1 year agoRelated Solutions
You are is considering replacing a five-year-old machine that originally cost $50,000. It was being depreciated...
You are is considering replacing a five-year-old machine that
originally cost $50,000. It was being depreciated using
straight-line to an expected salvage value of zero over its
original 10-year life and could now be sold for $40,000. The
replacement machine would cost $190,000 and have a five-year
expected life. It would be depreciated using the MACRS 5-year class
life. The actual expected salvage value of this machine after five
years is $20,000. The new machine is expected to operate much...
You are is considering replacing a five-year-old machine that originally cost $50,000. It was being depreciated...
You are is considering replacing a five-year-old machine that
originally cost $50,000. It was being depreciated using
straight-line to an expected salvage value of zero over its
original 10-year life and could now be sold for $40,000. The
replacement machine would cost $190,000 and have a five-year
expected life. It would be depreciated using the MACRS 5-year class
life. The actual expected salvage value of this machine after five
years is $20,000. The new machine is expected to operate much...
The G. Rod Electronic Components Corporation is considering replacing a 10-year old machine that originally cost...
The G. Rod Electronic Components Corporation is considering
replacing a 10-year old machine that originally cost $37,500, has a
current book value of $12,500 with five years of life left, and is
being depreciated using the straight line method over its 15 year
life with zero salvage value. The replacement machine being
considered would cost $100,000 and have a five year expected life
over which it would be depreciated using MACRS of 5 year. At the
termination of 5 years...
Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $51800...
Your corporation is considering replacing older equipment. The old
machine is fully depreciated and cost $51800 seven years ago. The
old equipment currently has no market value. The new equipment cost
$63100. 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 $37500. The new equipment is expected to save the
firm $29000 annually by increasing...
Q4) Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost...
Q4) Your corporation is considering replacing older equipment.
The old machine is fully depreciated and cost $66,263.00 seven
years ago. The old equipment currently has no market value. The new
equipment cost $59,022.00 . 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 $33,912.00 . The new equipment is expected
to save the firm $22,506.00...
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...
Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $60,304.00...
Your corporation is considering replacing older equipment. The
old machine is fully depreciated and cost $60,304.00 seven years
ago. The old equipment currently has no market value. The new
equipment cost $74,133.00 . 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 $13,952.00 . The new equipment is expected
to save the firm $15,285.00 annually...
Q) Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $47,124.00 seven years...
Q) Your corporation is considering replacing older
equipment. The old machine is fully depreciated and
cost $47,124.00 seven years
ago. The old equipment currently has no market value.
The new equipment cost $54,516.00 . 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 $32,908.00
. The new equipment is expected to save the firm
$35,365.00 annually by increasing efficiency and cost
savings. The...
Zankel Incorp is considering replacing its old machine with a new machine. The cost of a...
Zankel Incorp is considering replacing its old machine with a
new machine. The cost of a new machine is RM 300,000 with a useful
life of 4 years. The machine has an estimated salvage value of RM
45,000. The cost of installing this new machine will be RM 20,000.
In the initial period, RM 125,000 in net working capital is
required and to be recovered at the ending life of the machine.The
company was using the present machine for 4...
Zankel Incorp is considering replacing its old machine with a new machine. The cost of a...
Zankel Incorp is considering replacing its old machine with a
new machine. The cost of a new machine is RM 300,000 with a useful
life of 4 years. The machine has an estimated salvage value of RM
45,000. The cost of installing this new machine will be RM 20,000.
In the initial period, RM 125,000 in net working capital is
required and to be recovered at the ending life of the machine. The
company was using the present machine for...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Queueing Theory apply elementary queueing theory equations to compute statistics for the various scheduling systems assume...
- How is thunder and lightning made, and what causes it?
- Two small nonconducting spheres have a total charge of Q=Q1+Q2= 90.0 μC , Q1<Q2. When placed...
- QUESTION 6 A single line comment in C++ language source code can begin with _____ ...
- In a power plant based on a simple Rankine cycle, steam enters the turbine at 15...
- Cash budget—Basic Grenoble Enterprises had sales of $49,600 in March and $60,200in April. Forecast sales for...
- You have just purchased a share of stock for $ 21.03, The company is expected to...
ADVERTISEMENT