Considering the purchase of new computer system

Assignment Help Financial Management
Reference no: EM132072067

Kerfuffle Corporation is considering the purchase of a new computer system. The cost for the new system, net of set-up and delivery costs, will be $1.6 million. The new system will provide annual before-tax cost savings of $500,000 for the next five years. The increased efficiency of the new system will lower net working capital by $200,000 today. The CCA rate on the new system will be 30%. At the end of five years, the system can be salvaged for $100,000. The firm’s required rate of return is 15%, and its marginal tax rate is 35%. What is the NPV of this cost-cutting project?

Reference no: EM132072067

Questions Cloud

Value is based on discounted cash flows : If value is based on discounted cash flows, why should a company or investor analyze growth and ROIC ?
What is rate of return to investor in fund during the year : The fund paid year-end distributions of income and capital gains of $3.20. What is the rate of return to an investor in the fund during the year?
Return on invested capital growth and cash flow : Explain the relationship between return on invested capital ( ROIC ), growth and cash flow. How does return on invested capital affect a company's cash flows?
How much money did grandfather originally put into account : How much money did your grandfather originally put into the account? How much money would be in the account if you left the money there until your 25th birthday
Considering the purchase of new computer system : Kerfuffle Corporation is considering the purchase of a new computer system. What is the NPV of this cost-cutting project?
They need to put into the account today to ensure : how much money do they need to put into the account today to ensure that they will have $120,000 in 10 years?
Considering bidding on government project : Monsoon Inc. is considering bidding on a government project. What is the minimum bid that the firm should submit for this project?
Forward contract value is always equal : Forward contract value is always equal to. The value of any asset is equal to.
Create simple application that gathers personal information : Create a simple application that gathers the following personal information. Use a class named "Person" that holds the properties above.

Reviews

Write a Review

Financial Management Questions & Answers

  Company could form special purpose entity

A company could form a 'special purpose entity' (SPE)--under GAAP rules--to remove liabilities and assets off the company's financials

  Determines the chains average occupancy rate

Five Seasons Hotel is a chain with 10 hotels. Strategically, the chain implements a cookie-cutter approach to building and running its hotels, in that all hotels are practically identical. determines the chain’s average occupancy rate—the percent of ..

  Annual performance of firm short-term investment portfolio

A treasury manager is assessing the annual performance of the firm’s short-term investment portfolio.

  Purchase variable life insurance policy

If you purchase a variable life insurance policy, then amount of the death benefit depends on the returns of earned by funds where your premiums are invested.

  Most intellectual and moral persuasion

which philosophy do you see as having the most intellectual and moral persuasion?

  According to demographic estimates in his country

eff is 60 now and has one million euros in the bank. According to demographic estimates in his country, his life expectancy is 82 years

  Fiscal year-what was the net income after-tax

Delta Ray Brands Corp. just completed their latest fiscal year. The firm had sales of $17,006,900. Depreciation and amortization was $820,700, interest expense for the year was $875,400, and selling general and administrative expenses totaled $1,531,..

  What is the EAC for machine

Machine A costs $256,220, has a 3 year life, and has pretax operating costs of $63842 per year. What is the EAC for machine A?

  Call positions along with the total cash flow per barrel

Show the cash flows from the spot, put, and call positions along with the total cash flow per barrel.

  How many shares of stock are currently outstanding

Dividends are paid quarterly based on the annual rate of $2.00 per share. How many shares of stock are currently outstanding?

  Calculate the observed risk premium in each year

Calculate the arithmetic average returns for large-company stocks and T-bills over this period. answer with two decimal places.

  Determine the annual cost of purchasing the new technology

Determine the annual cost of purchasing the new technology. Determine the annual cost of continuing with the manual mixing.

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