Estimated salvage value

Assignment Help Finance Basics
Reference no: EM133069756

ABC Co. is considering replacing a 3D printer that was purchased two years ago with a useful life of 8 years (6 years of which, is remaining). The CCA rate on this printer is 30%. Currently, it can be sold for $2,500. If this old printer is not replaced, it is not expected to have any value at the end of its useful life.

The replacement printer has a cost of $8,000 and estimated useful life of 6 years, and an estimated salvage value of $800. The CCA rate on this machine is also 30%. The replacement printer would allow an output expansion, so sales would rise by 1,000 per year. Moreover, the new printer is more efficient and would reduce operating expenses by $1,500 per annum. The new printer would require an inventory increase of $2,000, but accounts payable would simultaneously increase by $500. ABC Co. corporate tax rate is 30% and its WACC is 15%. Should the company replace the old machine?

Reference no: EM133069756

Questions Cloud

Calculate the value of voltage using superposition theorem : For the circuit in Figure, calculate the value of voltage, V using superposition theorem
What is the annual erosion cost of adding : Jamie's Motor Home Sales currently sells 110 Class A motor homes, 220 Class C motor homes, and 280 pop-up trailers each year. They are considering adding a mid-
Create diversified portfolio : Timothy as a retail investor enjoys investing but for a long time has only managed to invest in a single company due to insufficient savings.
Prepare the bank reconciliation for low corporation : Prepare the bank reconciliation for Low Corporation for Oct 31, 2021 using the following information: The balance on the Oct 31, 2021 bank statement is $61,365
Estimated salvage value : ABC Co. is considering replacing a 3D printer that was purchased two years ago with a useful life of 8 years (6 years of which, is remaining). The CCA rate on t
Type of financial product : What was your role (lender, borrower, investor, etc.)? What type of financial product, instrument, or institution did you interact with?
Prepare the general journal entries to record the disposal : Prepare the general journal entries to record the disposal of the delivery vehicle and the acquisition of the replacement delivery vehicle
Determining the wacc and npv : -Tesla is planning to open its first manufacturing plant (for the production of batteries) outside the US. You are one of the financial analyst that will help a
What is the ytm : You are analyzing two bonds for possible purchase. The first bond is a 3-year Treasury bond with a 3% stated annual coupon rate (paid semiannually), a face valu

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the default risk premium on the corporate bonds

If the liquidity premium is 0.55%, what is the default risk premium on the corporate bonds? Round your answer to two decimal places.

  The risk-free asset

The risk-free asset?

  How the composition of the principal and interest components

Explain how the composition of the principal and interest components of a fixed-rate mortgage change over the life of the mortgage. What are the implications of this change?

  List five methodologies that can be used to consult

List five methodologies that can be used to consult with customers, other stakeholders and employees when planning resource use and acquisition?

  Compute the firm cost of capital

A corporation has a target capital structure of 40% debt and 60% equity. A new debt will be issued at a before tax yield and coupon rate of 10%. If the required rate of return of firm's stock is 15% and marginal rate of 40%, compute the firm's cos..

  Discuss the causes and impact on the local economy

Discuss the causes and impact on the local as well as the global economy. Discuss how the issue(s) were resolved and the lessons learned i.e. steps taken to prevent future re- occurrences.

  Discuss the difference between hard and soft trends

Discuss the difference between Hard and Soft Trends. How would you use Soft Trends to "add value"

  What is the firm current book value per share

What is the firm's current book value per share? $ 6.25. What is the firm's current P/E ratio? What is the current required return for Encore stock? What will be the new required return for Encore stock assuming that they expand into European and Lat..

  Discuss the performance of the stock over the last year

Go to Yahoo! Finance or another source and pick a stock to track for the last year. Discuss the performance of the stock over the last year and offer your.

  Calculate the unamortized discount

The initial proceeds a bond, the size of issue, the initial maturity of bond, and the years remaining to maturity are shown in the following table for a number of bonds.

  Compute the discounted payback statistic for project

Compute the discounted payback statistic for Project D if the appropriate cost of capital is 13 percent and the maximum allowable discounted payback is four yea

  Which of the following would likely encourage a firm

Which of the following would likely encourage a firm to increase the debt in its capital structure?

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