Question
In: Finance
Renegade Industries is considering the purchase of a new machine for the production of latex. Machine...
Renegade Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3.09 million and will last for six years. Variable costs are 32% of sales, and fixed costs are $1,954,670 per year. Machine B costs $4.96 million and will last for nine years. Variable costs for this machine are 22% of sales and fixed costs are $1,376,974 per year. The sales for each machine will be $5.6 million per year. The required return is 9 %, and the tax rate is 38%. Both machines will be depreciated to zero on a straight-line basis. Each project will require an increase in inventory of $409,169, an increase in accounts receivable of $657,917, and an increase in accounts payable of $368,540. Assume a salvage value of $747,768 for both machines.
Calculate the NPV for machine B. (Round answer to 2 decimal places. Do not round intermediate calculations)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Renegade Industries is considering the purchase of a new machine for the production of latex. Machine...
Renegade Industries is considering the purchase of a new machine
for the production of latex. Machine A costs $2.98 million and will
last for six years. Variable costs are 33% of sales, and fixed
costs are $2008914 per year. Machine B costs $5.12 million and will
last for nine years. Variable costs for this machine are 24% of
sales and fixed costs are $1360332 per year. The sales for each
machine will be $9.9 million per year. The required return...
Renegade Industries is considering the purchase of a new machine for the production of latex. Machine...
Renegade Industries is considering the purchase of a new machine
for the production of latex. Machine A costs $2.86 million and will
last for six years. Variable costs are 34% of sales, and fixed
costs are $1,971,998 per year. Machine B costs $5.06 million and
will last for nine years. Variable costs for this machine are 24%
of sales and fixed costs are $1,287,522 per year. The sales for
each machine will be $6.1 million per year. The required return...
Renegade Industries is considering the purchase of a new machine for the production of latex. Machine...
Renegade Industries is considering the purchase of a new machine
for the production of latex. Machine A costs $2.94 million and will
last for six years. Variable costs are 34% of sales, and fixed
costs are $2,065,628 per year. Machine B costs $4.86 million and
will last for nine years. Variable costs for this machine are 25%
of sales and fixed costs are $1,436,786 per year. The sales for
each machine will be $4.7 million per year. The required return...
Renegade Industries is considering the purchase of a new machine for the production of latex. Machine...
Renegade Industries is considering the purchase of a new machine
for the production of latex. Machine A costs $2.86 million and will
last for six years. Variable costs are 34% of sales, and fixed
costs are $1,971,998 per year. Machine B costs $5.06 million and
will last for nine years. Variable costs for this machine are 24%
of sales and fixed costs are $1,287,522 per year. The sales for
each machine will be $6.1 million per year. The required return...
Renegade Industries is considering the purchase of a new machine for the production of latex. Machine...
Renegade Industries is considering the purchase of a new machine
for the production of latex. Machine A costs $3.09 million and will
last for six years. Variable costs are 32% of sales, and fixed
costs are $1,987,522 per year. Machine B costs $4.93 million and
will last for nine years. Variable costs for this machine are 21%
of sales and fixed costs are $1,350,735 per year. The sales for
each machine will be $6.4 million per year. The required return...
Renegade Industries is considering the purchase of a new machine for the production of latex. Machine...
Renegade Industries is considering the purchase of a new machine
for the production of latex. Machine A costs $3.07 million and will
last for six years. Variable costs are 34% of sales, and fixed
costs are $1,930,215 per year. Machine B costs $4.87 million and
will last for nine years. Variable costs for this machine are 25%
of sales and fixed costs are $1,356,597 per year. The sales for
each machine will be $4.1 million per year. The required return...
Renegade Industries is considering the purchase of a new machine for the production of latex. Machine...
Renegade Industries is considering the purchase of a new machine
for the production of latex. Machine A costs $3.07 million and will
last for six years. Variable costs are 31% of sales, and fixed
costs are $2,010,237 per year. Machine B costs $5.09 million and
will last for nine years. Variable costs for this machine are 21%
of sales and fixed costs are $1,394,417 per year. The sales for
each machine will be $5.2 million per year. The required return...
Renegade Industries is considering the purchase of a new machine for the production of latex. Machine...
Renegade Industries is considering the purchase of a new machine
for the production of latex. Machine A costs $2.86 million and will
last for six years. Variable costs are 33% of sales, and fixed
costs are $1,976,191 per year. Machine B costs $4.95 million and
will last for nine years. Variable costs for this machine are 24%
of sales and fixed costs are $1,409,684 per year. The sales for
each machine will be $5.3 million per year. The required return...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine...
Vandalay Industries is considering the purchase of a new machine
for the production of latex.
Machine A costs $2,900,000 and will last for six years. Variable
costs are 35% of sales and fixed
costs are $170,000 per year. Machine B costs $5,100,000 and will
last for nine years. Variable
costs for this machine are 30% of sales and fixed costs are
$130,000 per year. The sales for each
machine will be $10 million per year. The required return is 10%...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine...
Vandalay Industries is considering the purchase of a new machine
for the production of latex. Machine A costs $3,048,000 and will
last for six years. Variable costs are 40 percent of sales, and
fixed costs are $195,000 per year. Machine B costs $5,229,000 and
will last for nine years. Variable costs for this machine are 35
percent of sales and fixed costs are $130,000 per year. The sales
for each machine will be $10.1 million per year. The required
return...
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