Npv of the new production line

Assignment Help Finance Basics
Reference no: EM132535310

Crane Manufacturing management is considering overhauling their existing line, which currently has both a book value and a salvage value of $0. It would cost $250,000 to overhaul the existing line, but this expenditure would extend its useful life to five years. The line would have a $0 salvage value at the end of five years. The overhaul outlay would be capitalized and depreciated using MACRS over three years. The tax rate is 35 percent, the opportunity cost of capital is 13 percent. The NPV of the new production line is $-364,000. (Do not round discount factor. Round your intermediate calculations and final answer to the nearest dollar, e.g. 5,275.)

NPV of renovating old line $_________

Should Crane replace or renovate the existing line?

Crane should _________ the existing line.

Reference no: EM132535310

Questions Cloud

Analyze the key influences : Analyze the key influences that the theorretical and practical aspects of public leadership may exert upon a public leader's performance.
Company return on assets for the fiscal year : Its expenses for the year were $3,500,000. Its total assets were $10,000,000. What is the company's return on assets for the fiscal year?
Describe prospa business : Who does it lend money to? How does it attract borrowers? How does it assess credit risk? What is the source of funding for these loans?
Why goldman sachs was a disciple of albert carr theory : Explain Why Goldman Sachs was a disciple of Albert Carr's theory of "business is a poker game and we are all bluffing." Explain in detail
Npv of the new production line : Crane Manufacturing management is considering overhauling their existing line, which currently has both a book value and a salvage value of $0.
According to public policy : According to Public Policy, for a condition to be converted into a problem people must have some value or standard by which the troubling condition
Choosing venture capital firms : Suppose you are working as Finance Manager for Chaldal. Due to Corona-Virus, the company's sales have suddenly increased, but they are facing problem
Capital asset pricing model : Kings plc is an all-equity financed listed company. It develops customized software for clients which are mainly large civil engineering companies
Natural hazards and disasters : It is important to note that IT is not just susceptible to man-made threats but also natural hazards and disasters. Organizations need to be prepared.

Reviews

Write a Review

Finance Basics Questions & Answers

  Which bond offers the higher tax equivalent yield

A bank is considering two securities: a 30-year Treasury bond yielding 7 percent and a 30-year municipal bond yielding 5 percent.

  Discuss the services provided by financial institutions

Discuss the services provided by financial institutions and markets to help manage the risks presented by fluctuating foreign currency rates.

  Record commerce bank trade-in of old fixtures for new ones

Now let's change one fact. Commerce Bank feels compelled to do business with Shoreside Furniture, a bank customer, even though the bank can get the fixtures.

  What is the expected number of retained foreign bodies

In CABG surgery, there is a .00014 probability of a retained foreign body (e.g., a sponge or a surgical instrument) left inside the patient.

  What price shoukd the company expect

What price shoukd the company expect its existing shares shares to sell immediately after the announcement? (I'm not supposed to round intermediate calculations

  How an effective compensation and benefit system contributes

How an effective compensation and benefit system contributes to organizational effectiveness. The principle components of your revised compensation and benefit system for a large-scale organization as well as a recommendation for each component. A co..

  Effective semiannual interest rate

If the effective semiannual interest rate is 4%, find the fair value of the security today.

  Prepare Historical Average and Standard Deviation for stock

Using the 2014 financial statements from your stocks, prepare the Historical Average and Standard Deviation for each stock

  Will the buyer succeed in recovering the excess

he buyer didn't commence action to recover the excess payment until some nine months after delivery. Will the buyer succeed in recovering the excess.

  Estimating cost of capital measures

US Steel has $3.16 billion in total debt (which approximates its market value). Interest expense for the year was about $214.0 million.

  Find the probability that a sample

Find the probability that a sample of 900 voters would yield a sample proportion in favor of the candidate within 3 percentage points of the actual proportion

  Explain the term structure of interest rates

One method used to obtain an estimate of the term structure of interest rates is called bootstrapping. Suppose you have a one-year zero coupon bond with a rate of r1 and a two-year bond with an annual coupon payment of C

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