Question
In: Finance
St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new...
St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings before depreciation from $30,000 to $52,000 per year. The new machine will cost $87,500, and it will have an estimated life of 8 years and no salvage value. The new riveting machine is eligible for 100% bonus depreciation at the time of purchase. The applicable corporate tax rate is 25%, and the firm's WACC is 16%. The old machine has been fully depreciated and has no salvage value.
What is the NPV of the project? Negative value, if any, should
be indicated by a minus sign. Round your answer to the nearest
cent.
$
Solutions
jeff jeffy answered 1 year agoRelated Solutions
St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new...
St. Johns River Shipyards is considering the replacement of an
8-year-old riveting machine with a new one that will increase
earnings before depreciation from $30,000 to $44,000 per year. The
new machine will cost $82,500, and it will have an estimated life
of 8 years and no salvage value. The new riveting machine is
eligible for 100% bonus depreciation at the time of purchase. The
applicable corporate tax rate is 25%, and the firm's WACC is 14%.
The old machine...
St. johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new...
St. johns River Shipyards is considering the replacement of an
8-year-old riveting machine with a new one that will increase
earnings before depreciation from $24,000 to $46,000 per year. The
new machine will cost $80,000, and it will have an estimated life
of 8 years and no salvage value. The new machine will be
depreciated over its 5-year MACRS recovery period, so the
applicable depreciation rates are 20, 32%, 19%, 12%, 11%, and 6%.
The applicable corporate tax rate is...
St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new...
St. Johns River Shipyards is considering the replacement of an
8-year-old riveting machine with a new one that will increase
earnings before depreciation from $27,000 to $52,000 per year. The
new machine will cost $82,500, and it will have an estimated life
of 8 years and no salvage value. The new machine will be
depreciated over its 5-year MACRS recovery period; so the
applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%.
The applicable corporate tax rate is...
REPLACEMENT ANALYSIS St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with...
REPLACEMENT ANALYSIS St. Johns River Shipyards is considering
the replacement of an 8-year-old riveting machine with a new one
that will increase earnings before depreciation from $27,000 to
$56,000 per year. The new machine will cost $82,500, and it will
have an estimated life of 8 years and no salvage value. The new
machine will be depreciated over its 5-year MACRS recovery period,
so the applicable depreciation rates are 20%, 32%, 19%, 12%, 11%,
and 6%. The applicable corporate tax...
12. St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a...
12.
St. Johns River Shipyards is considering the replacement of an
8-year-old riveting machine with a new one that will increase
earnings before depreciation from $30,000 to $46,000 per year. The
new machine will cost $80,000, and it will have an estimated life
of 8 years and no salvage value. The new riveting machine is
eligible for 100% bonus depreciation at the time of purchase. The
applicable corporate tax rate is 25%, and the firm's WACC is 12%.
The old...
Q10 St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a...
Q10
St. Johns River Shipyards is considering the replacement of an
8-year-old riveting machine with a new one that will increase
earnings before depreciation from $24,000 to $48,000 per year. The
new machine will cost $90,000, and it will have an estimated life
of 8 years and no salvage value. The new machine will be
depreciated over its 5-year MACRS recovery period; so the
applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%.
The applicable corporate tax rate...
Q 10 St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with...
Q 10
St. Johns River Shipyards is considering the replacement of an
8-year-old riveting machine with a new one that will increase
earnings before depreciation from $27,000 to $52,000 per year. The
new machine will cost $82,500, and it will have an estimated life
of 8 years and no salvage value. The new machine will be
depreciated over its 5-year MACRS recovery period; so the
applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%.
The applicable corporate tax...
St.Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one...
St.Johns River Shipyards is considering the replacement of an
8-year-old riveting machine with a new one that will increase
earnings before depreciation from $22,000 to $56,000 per year. The
new machine will cost $100,500, and it will have an estimated life
of 8 years and no salvage value. The new machine will be
depreciated over its 5-year MACRS recovery period; so the
applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%.
The applicable corporate tax rate is 35%,...
Replacement analysis Mississippi River Shipyards is considering the replacement of an 8-year-old riveting machine with a...
Replacement analysis
Mississippi River Shipyards is considering the replacement of an
8-year-old riveting machine with a new one that will increase
earnings before depreciation from $24,000 to $48,000 per year. The
new machine will cost $82,500, and it will have an estimated life
of 8 years and no salvage value. The new machine will be
depreciated over its 5-year MACRS recovery period; so the
applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%.
The applicable corporate tax rate...
Replacement Analysis St. Johns River Shipyards' welding machine is 15 years old, fully depreciated, and has...
Replacement Analysis
St. Johns River Shipyards' welding machine is 15 years old,
fully depreciated, and has no salvage value. However, even though
it is old, it is still functional as originally designed and can be
used for quite a while longer. The new welder will cost $81,500 and
have an estimated life of 8 years with no salvage value. The new
welder will be much more efficient, however, and this enhanced
efficiency will increase earnings before depreciation from $26,000
to...
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