Make the replacement economically advantageous

Assignment Help Financial Management

Reference no: EM131620307

A company that makes meters purchased a packaging system for $700,000 three years ago. The estimated salvage value was $80,000 after 8 years of use. Currently, the expected remaining life is 4 years with an AOC of $30,000 per year and an estimated salvage value of $60,000. The company is considering early replacement of the system with a new system that costs $570,000 and has a 12-year economic service life, a $65,000 salvage value, and an estimated AOC of $40,000 per year. If the MARR for the corporation is %10 per year, The minimum trade-in value necessary now to make the replacement economically advantageous is closest to:

Reference no: EM131620307

Questions Cloud

What must your deposit each year be : If the interest rate is assumed to be 10% per year for each of the net 20 years, what must your deposit each year be?

Free cash flows associated with the new machine : What are the incremental free cash flows associated with the new machine?

How much must you deposit each year to meet your goal : How much must you deposit each year to meet your goal?

You expect to sell share immediately after it pays dividend : what price do you need if you expect to sell the share immediately after it pays the dividend?

Make the replacement economically advantageous : The minimum trade-in value necessary now to make the replacement economically advantageous is closest to:

How much payment goes towards principal reduction : You are borrowing $750000 to invest in a commercial real estate property. How much payment goes towards principal reduction?

Mutually exclusive projects that differ in scale : To add the greatest value to a firm, mutually exclusive projects that differ in scale or timing should be evaluated using the _____.

Calculate the first clients monthly payment : Insert a formula PMT function in cell J5 to calculate the first clients monthly payment.

Evaluating capital project for investment : Tangerine Inc. is evaluating capital project for investment. Initial cash outflow in Year 0 is $1,500 followed by cash inflow of $500 each year for four years.

User Account

All Pages