Basis to zero salvage value over an original ten year life

Assignment Help Financial Management

Reference no: EM131502837

Frankfurt Company is replacing an old machine that was purchased 5 years ago at a cost of 500,000. It's being depreciated on a straight line basis to a zero salvage value over an original ten year life. It's has a current market value of $180,000. The new machine will cost $250,000 and will last 5 years at which time it will have a salvage value of $40,000. It is in the three-year ACRS class (.33, .45, 15, 7). The machine will not change sales but will reduce operating expenses by $48,000 per year. Net Working Capital will increase by $10,000 if the new machine is purchased. Tax rate is 40%. Set up the cash flows for each individual period.

Show work

Reference no: EM131502837

Questions Cloud

Determine the pvccats of the purchase : New equipment costs $98,500 and is expected to last for four years with no salvage value. determine the PVCCATS of the purchase.

Firms debt and equity and assuming excess cash is? zero : What is? Ojai's debt-to-enterprise-value ratio calculated using the market values of the? firm's debt and equity and assuming excess cash is? zero?

An airline is considering two types of engine systems : An airline is considering two types of engine systems for use in its planes. Each has the same life and the same maintenance and repair record.

Interest and exchange rates : DKNY owes 7 million Mexican pesos in 30 days for a recent shipment from Mexico. It faces the following interest and exchange rates:

Basis to zero salvage value over an original ten year life : It's being depreciated on a straight line basis to a zero salvage value over an original ten year life.

Binomial tree to estimate the option value and hedge ratio : Please use a three-step binomial tree to estimate the option value and the hedge ratio.

Two investment with the same risk and return : Two investment with the same risk and Return. Discuss risk management strategies ? Which is better for an american investor a week or strong dollar ?

What is the companys WACC : Assuming a 40% tax rate, what is the company’s WACC?

Ebit indifference level associated with two financing plans : Find the EBIT indifference level associated with the two financing plans.

User Account

All Pages