Cash flows related to the acquisition of the new equipment

Assignment Help Financial Management

Reference no: EM131954810

The J. J. Hill Company is considering new digging equipment machine. The existing digging equipment cost $1,000,000 five years ago and is being depreciated using MACRS, when classified as a 5-year asset. Hill's management estimates the old equipment can be sold for $200,000. The new equipment costs $1,200,000 and would be depreciated over five years using MACRS. At the end of the fifth year, Hill's management intends to sell the new equipment for $400,000. The new equipment is more efficient and would reduce expense by $200,000 per year for the next five years. The marginal tax rate is 35%.

(a) What are the cash flows related to the acquisition of the new equipment?

(b) What are the cash flows related to the disposition of the old equipment?

(d) What are the operating cash flows for each year?

(e) What the net cash flows for each year?

Reference no: EM131954810

Questions Cloud

What is the future value at a discount rate : What is the future value at a discount rate of 23 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Why do capable managers sometimes make bad decisions : Why do capable managers sometimes make bad decisions? What could an individual manager do to improve decision-making skills?

Manufacturing intends to issue callable-perpetual bonds : Bowdeen Manufacturing intends to issue callable, perpetual bonds with annual coupon payments.

Bond will decrease in price by : Bond K is a 9 percent coupon bond. Both bonds have 7 years to maturity, make semiannual payments and have a YTM of 6 percent.

Cash flows related to the acquisition of the new equipment : What are the cash flows related to the acquisition of the new equipment? What are the operating cash flows for each year?

Calculate the npv and irr with mitigation : Calculate the NPV and IRR with mitigation. Round your answers to two decimal places. Enter your answer for NPV in millions.

Pros and cons of government-provided deposit insurance : Compare and contrast debt versus equity issues. What are the pros and cons of government-provided deposit insurance?

Compute the aftertax income : The Canton Corporation shows the following income statement. The firm uses FIFO inventory accounting. CANTON CORPORATION Income Statement for 20X1 Sales.

The initial investment outlay : Talbot Industries is considering launching a new product. What is the initial investment outlay?

User Account

All Pages