Considering replacing its machine with model

Assignment Help Financial Management
Reference no: EM131939844

TM company is considering replacing its machine with a new model that sells for $40,000, the cost of installation is $6,000. The old machine has been fully depreciated and has a $2500 salvage value. The new machine will be depreciated as a 3-year MACRS asset. Revenues are expected to increase $18,000 per year over the 5-year life of the new machine. At the end of 5 years the new machine is expected to have a $1500 salvage value. What are the NPV IRR for this project if TM has a required rate of return of 14% and a marginal tax rate of 35%? Operating costs are not expected to increase from the current level of $8,000 per year. Discuss your recommendations.

Reference no: EM131939844

Questions Cloud

What is the yield to maturity for SWH Corporation bond : What is the yield to maturity for an SWH Corporation bond on January 1, 2018 if the market price of the bond on that date is $950?
What is the total of the deductible expenses : Camila is electing to deduct the two football tickets as business gifts. What is the total of the deductible expenses?
Calculate the seller basis in repossessed real property : How to calculate the seller's basis in repossessed real property.
Foreclosed upon and the mortgage holder issued : Janet's home was foreclosed upon and the mortgage holder issued her a Form 1099. the fair market value of the home was $108,000 on the date of foreclosure?
Considering replacing its machine with model : TM company is considering replacing its machine with a new model that sells for $40,000, the cost of installation is $6,000.
Under what circumstances would lender file : Under what circumstances would a lender file Form 1099-A with the IRS and send the taxpayer a copy?
How should we calculate the rate of simple interest : How should we calculate the rate of simple interest? Is the simple rate same as a compound rate?
Calculates the taxpayer initial cost basis : Calculates the taxpayer's initial cost basis. Is used to calculate the tax-free portion of each payment.
What are the pro and cons of using each FX derivative : What are the pro and cons of using each FX derivative in general?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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!

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