Should the company purchase the saw

Assignment Help Finance Basics

Reference no: EM132074782

Question: Rocky Mountain Lumber, Inc., is considering purchasing a new wood saw that costs $45,000. The saw will generate revenues of $100,000 per year for five years. The cost of materials and labor needed to generate these revenues will total $60,000 per year, and the other expenses will be $10,000 per year. The machine is expected to sell for $1, 400 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Rocky Mountain's tax rate is 34 percent, and its opportunity cost of capital is 10.30 percent. What is the project's NPV? (Do not round intermediate calculations. Round final answers to the nearest whole dollar, e.g. 5, 275.) Should the company purchase the saw? The company the machine.

Reference no: EM132074782

Questions Cloud

Describe the strategies a small business : Describe the strategies a small business could use in setting the price of a new product. What objectives should the strategy seek to achieve?

Develop a therapeutic relationship with patients : Discuss how nurses use professional communication skills to develop a therapeutic relationship with patients

How do groups normally develop : Based on your self-assessment, what do you see as your strengths and weaknesses regarding working on a team?

What is the cycle-service level when the target inventory : a. What is the cycle-service level when the target inventory is set at 300 boxes?

Should the company purchase the saw : Rocky Mountain Lumber, Inc., is considering purchasing a new wood saw that costs $45,000. The saw will generate revenues of $100,000 per year for five years.

What are potential risks associated with remote access : Do you believe a separate policy should be written to address remote access? If so, what should be included in the policy?

Project team to leverage senior management : How might Ted utilize the project team to leverage senior management to be open to additional funding?

What factors might you consider when faced with scenarios : The role Decisions Trees play in problem-solving is well covered in the textbook, and many practical examples are available on-line. In this unit we will use.

Describe innovation in your own words : 1. Describe innovation in your own words. 2. How do you think you performed in the team meeting?

User Account

All Pages