User Account

All Pages

Calculate the annual incremental operating cash flows

Assignment Help Corporate Finance
Reference no: EM13949019

CellU, a subsidiary of CompU, is looking to replace one of the machines they use to manufacture cell phones with a new, more efficient model. The current machine cost $7,500, is three years old, and is depreciated using the MACRS 3-year recovery period. The current machine could be sold now for $1,000, but at the end of 3 years it would be worthless. The cost of the new machine is $11,500, installation costs are $500, and would require an increase in net working capital of $1,000. The expected life of the new machine is 3 years, is depreciated using the MACRS 3-year recovery period, and will reduce annual labor expenses from $10,000 to $4,000. At the end of the project the firm will be able to sell the new machine for $3,000 and recover their investment in net working capital. The firm has a marginal tax rate of 40 percent.

a. Calculate the initial investment of the new machine.
b. Calculate the annual incremental operating cash flows for the new machine.
c. Calculate the terminal value of the new machine. 

Reference no: EM13949019

Questions Cloud

Use an er diagram to represent the data modeling. : Sketch a course information table using the following table as an example. Feel free to add or remove attributes based on your analysis
Discounting-reinvestment and combination approach : The company uses a 9 percent interest rate on all of its projects. What is the MIRR of the project using the reinvestment approach? The discounting approach? The combination approach?
Angular velocity at instant : The 10-lb bar is pinned at its center O and connected to a torsional spring. The spring has a stiffness k = 5 lb # ft>rad, so that the torque developed is M = (5u) lb # ft, where u is in radians. If the bar is rele..
Discuss how ideas about how wellness and well-being have : Discuss how ideas about how wellness and well-being have developed as presented in the literature used in your module readings, as well as the modules themselves.Identify five concerns and discuss one concern that these issues raise in your mind, tha..
Calculate the annual incremental operating cash flows : Calculate the annual incremental operating cash flows for the new machine. Calculate the terminal value of the new machine.
Speculate on securities in order to help our company grow : To what extent do you agree or disagree with the following statement on a scale of 1 to 5 where 1 = strongly disagree and 5 = strongly agree. Please explain your answer. "As the Chief Financial Officer, I allocate 5% of our cash reserves each year to..
Public- and private-sector responders collaborate : What public- and private-sector resources could be used to respond to the threat? How can public- and private-sector responders collaborate?
Prepare a production report for the assembly department : Prepare a production report for the Assembly Department for February using the weighted average method of costing. The report should disclose the physical flow of units.
Would any of the benefits and problems be unique : If a forced distrubution performance management system were implemented in a Saudi Arabian company, what sort of benefits and problems might it bring? Would any of the benefits and problems be unique

Reviews

Write a Review

Corporate Finance Questions & Answers

  Impact of the global economic crisis on business environment

This paper reviews the article of ‘the impact of the global economic crisis on the business environment' that is written by Roman & Sargu (2011).

  Explain the short and the long-run effects on real output

Explain the short and the long-run effects on real output, price, and unemployment

  Examine the requirements for measuring assets

Examine the needs for measuring assets at fair value in accounting standards

  Financial analysis report driven by rigorous ratio analysis

Financial analysis report driven by rigorous ratio analysis

  Calculate the value of the merged company

Calculate the value of the merged company, the gains (losses) to each group of shareholders, NPV of the deal under different payment methods. Synergy remains the same regardless of payment method.

  Stock market project

Select five companies for the purpose of tracking the stock market, preparing research on the companies, and preparing company reports.

  Write paper on financial analysis and business analysis

Write paper on financial analysis and business analysis

  Intermediate finance

Presence of the taxes increase or decrease the value of the firm

  Average price-earnings ratio

What is the value per share of the company's stock

  Determine the financial consequences

Show by calculation the net present value for the three alternatives (no education, network design certification, mba). Also, according to NPV suggest which alternative you advise your friend to choose

  Prepare a spread sheet model

Prepare a spread sheet model for the client that determines NPV/IRR with and without tax.

  Principles and tools for financial decision-making

Principles and tools for financial decision-making. Analyse the concept of corporate capital structure and compute cost of capital.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd