Mississippi river shipyards is considering the replacement

Assignment Help Finance Basics

Reference no: EM13551571

Mississippi River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings before deprecia- tion from $27,000 to $54,000 per year. The new machine will cost $82,500, and it will have an estimated life of 8 years and no salvage value. The new machine will be depreciated over its 5-year MACRS recovery period; so the applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%. The applicable corporate tax rate is 40%, and the firm's WACC is 12%. The old machine has been fully depreciated and has no salvage value. Should the old riveting machine be replaced by the new one? Explain your answer.

Reference no: EM13551571

Questions Cloud

A leader is a visionary : A leader is a visionary who has the end goal in mind and can see the big picture. A leader is a motivator of his/her followers. There are a variety of leadership styles a leader may hold. What separates a leader from the rest are the traits th..

Lagging its industry averages : Hatfield Medical Supplies's stock price had been lagging its industry averages

What is the effective annual rate on this arrangement : What is the effective annual rate on this arrangement?

Calculate the project''s profitability index : Calculate the project's Profitability Index.

Mississippi river shipyards is considering the replacement : Mississippi River Shipyards is considering the replacement

Which portfolio would you recommend and why : Which portfolio would you recommend and why?

Annualized dividend yield : The S&P 500 Index price is $925.28 and its annualized dividend yield is 1.40%. LIBOR is 4.2%. How many futures contracts will you need to hedge a $25 million portfolio with a beta of 0.9 for one year?

Determine the true azimuth and bearing for that line : For the simple curve with an arc length of 1090.83 feet and a tangent of 606.81 feet, if the station of the PI is 24+57.00, what are the stations of the PC and the PT?

What is the corresponding capitalization rate : What is the corresponding capitalization rate?

User Account

All Pages