Considering whether to replace an existing flow meter

Assignment Help Financial Management

Reference no: EM13881172

You are considering whether to replace an existing flow meter. The existing flow meter can be sold now for $50 or it can be sold in one year for $10. It will cost $30 to operate and maintain over the next year (in end of year value). A new meter costs 400$ and has a 10-year life. It can be sold for $40 at the end of its life. The new meter costs $14 per year to operate and maintain. Assume there is no corporate tax and your firm uses a cost of capital of 12% for projects such as this.

Do you recommend replacing the old meter immediately?

Reference no: EM13881172

Questions Cloud

Amortization schedule by the straight line method. : 1.On January 1, 2013, Bradley Recreational Products issued $100,000, 9%, four year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $96,768 to yield an annual return of 10%.

What is the margin of safety in units sold : Juliet’s Children’s Clothes Company (JCCC) has a target profit of $100,000. That profit requires unit sales to be 2,000. JCCC’s variable cost per unit is $100 and fixed expenses are $50,000. If JCCC achieves that target profit, what is the margin of ..

The straight method is used to depreciation fixed assets : As a recently appointed auditor for Gibbs Manufacturing Co., the Manager of the audit, asked you to examine selected accounts before issue the financial statement of 12/31/10, to be audited. The straight method is used to depreciation fixed assets. T..

Which would be handled primarily by your servers : Which would be handled primarily by your servers. You also plan to offer introductory specials to attract customers during the initial months of business. Identify some advantages and disadvantages of investing in a POS system as part of this new ..

Considering whether to replace an existing flow meter : You are considering whether to replace an existing flow meter. The existing flow meter can be sold now for $50 or it can be sold in one year for $10. It will cost $30 to operate and maintain over the next year (in end of year value). Do you recommend..

In 1956, nicolai rizzoli opened a pizza restaurant : In 1956, Nicolai Rizzoli opened a pizza restaurant that he named Rizzoli in St. Louis, Missouri. Over the years, he opened both company and franchise locations and grew the business to include over 40 restaurants that serve the three states around..

Tennessee harvester corporation issued debenture bonds : 1.On January 1, 2013, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:

The parties (who is the plaintiff : the Parties (Who is the plaintiff? The defendant? The appellant? The appellee?) the History of the case (Who won at trial court? Who won at the lower appellate level? Who won in this decision?) the Facts (What happened that caused the plainti..

Real interest rates compared to nominal interest rates : You observe that the current interest rate on short-term U.S. Treasury bills is 2.64 percent. You also read in the newspaper that the GDP deflator, which is a common macroeconomic indicator used by market analysts to gauge inflation rate, currently i..

User Account

All Pages