Both machines will be depreciated on a straight-line basis

Assignment Help Financial Management

Reference no: EM13949081

Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,078,000 and will last for six years. Variable costs are 30 percent of sales, and fixed costs are $220,000 per year. Machine B costs $5,274,000 and will last for nine years. Variable costs for this machine are 25 percent of sales and fixed costs are $155,000 per year. The sales for each machine will be $10.6 million per year. The required return is 9 percent, and the tax rate is 34 percent. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it wears out on a perpetual basis. Calculate the EAC for each machine.

Reference no: EM13949081

Questions Cloud

Company will pay no dividends and reinvest all earnings : Sales and profits of Growth Inc. are expected to grow at a rate of 25% per year for the next six years but the company will pay no dividends and reinvest all earnings. After that, the dividends will grow at a constant annual rate of 7%. At the end of..

Explain what the tradeoffs are in using a marker-column : Explain what the tradeoffs are in using a marker-column for deletion as opposed to actually deleting a row from the table.

Input from an optical encoder : Design a logic circuit that takes a 4-bit Gray code input from an optical encoder and translates it into two 4-bit nibbles of BCD. Design a logic circuit that takes a 4-bit Gray code input from an optical encoder and determines if the input value..

How technology has been used to improve medical care : Your project for this course is to develop a paper that provides an overview of how technology has been used to improve medical care. You have a choice of two options for this project: Pick one or two of the medical specialties listed below. Resea..

Both machines will be depreciated on a straight-line basis : Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,078,000 and will last for six years. Variable costs are 30 percent of sales, and fixed costs are $220,000 per year. The required return i..

What is the current value of operations-terminal value : Corporate Valuation Ishita Corp has never paid a dividend. Free cash flow is projected to follow the timeline below. After the third year, FCF is expected to grow at 8% annually. The WACC is 13%. $M Year 1 2 3 -10 20 80 What is Ishita's Terminal Valu..

Representing the binary number : Design a circuit with a 4-bit input representing the binary number A3A2A1A0. The output should be 1 if the input value is divisible by 3. Assume that the circuit is to be used only for the digits 0 through 9 (thus, values for 10 to 15 can be don't..

Decided to bid on the contract-what bid price : Dahlia Enterprises needs someone to supply it with 122,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost you $890,000 to install the equipment n..

Draw a fully-labeled erd that includes entities : Draw a fully-labeled ERD that includes entities, labeled relationships (indicate whether each relationship is mandatory or optional), primary keys, foreign keys, and cardinalities. Follow the format (Crow's Foot notation) and naming conventions.

User Account

All Pages