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Estate Developers purchased a machine five years ago at a cost of £7,500. The machine had an expected economic life of 15 years at the time of purchase and a zero estimated salvage value at the end of 15 years. It is being depreciated on a straight line basis and currently has a book value of £5,000. The Financial Manager has conducted a feasibility study aimed at acquiring a new machine for £12,000 and is depreciated over its 10 years useful life. The new machine will expand sales from £10,000 to £11,000 per annum and will reduce labour and materials usage sufficiently to cut operating cost from £7,000 to £5,000. The salvage value of the new machine is £2,000 at the end of useful life. The current market value of the old machine is £1,000 and tax is 40%. The firms cost of capital is 10%. The financial manager wishes to make a decision on whether to replace the old machine with a new one and he seeks your help.The decision to replace takes into account the following:
a) Estimate the actual cash outlay attributable to the new machine.
b) Determine the incremental cash flows.
c) Compute the NPV of incremental cash flows.
d) Add up the present value of the expected salvage value to the P.V. of the incremental cash flow.
e) Ascertain whether the NPV is positive or not.
What types of safeguards or changes in procedures would you suggest for Stratton Medical Center in order to prevent the situation?
How could the negative impacts have been ameliorated or avoided?
Describe how the changing attitudes of the times were expressed through these various political events and movements such as civil rights.
compares leading with fear to leading with lovecompare and contrast leading with fear or leading with love in the
What advantages might a socialist system have in responding
When 27.20mL of .5 M H2SO4 is added to 27.20 of 1M KOH in a coffee cup calorimeter at 23.5 degrees C, the temp rises to 30.17 degrees C. Calculate delta H of this reaction.
For example, one student may discuss human capital and education; another might investigate human capital and health, human capital and global warming, while still another might choose to write about human capital and parenting.
international events and updated strategies for hrm1. note that the publication dates in the references in this chapter
Using Microsoft Visio or an open source alternative such as Dia, update the diagram to include two (2) error-handling pathways. Note: The graphically depicted solution is not included within the required page length.Produce a narrative which describe..
Explain Same as cash deals are becoming very popular these days and Research a couple same as cash deals and write an essay explaining the advantages and disadvantages of each.
Use these information to compute accounts receivable turnover ratios and average collection periods for 2005 and 2006. Based on your review is Hickory Corporation managing its receivables better or worse in 2006 than it did in 2005?
Describe how the risks may affect these three sources of financing and the impact overall on weighted average cost of capital - Default risk
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