Should the old welder be replaced by the new one

Assignment Help Financial Management

Reference no: EM131351789

St. Johns River Shipyards's welding machine is 15 years old, fully depreciated, and has no salvage value. However, even though it is old, it is still functional as originally designed and can be used for quite a while longer. The new welder will cost $182,500, and have an estimated life of 8 years with no salvage value. The new welder will be much more efficient, however, and this enhanced efficiency will increase earnings before depreciation from $27,000 to $74,000 per year. The new machine will be depreciated over its 5-year MACRS recovery period, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The applicable corporate tax rate is 40%, and the project cost of capital is 12%. Should the old welder be replaced by the new one?

Old welder -Select-should or should not be replaced? What is the NPV of the project?

Please show work and if able the Excel calculation formulas.

Reference no: EM131351789

Questions Cloud

What is the median of the data : What is a representative average for the number of members in the House of Representatives per state? Explain.

How would you implement a pull system : Consider a worker-paced line with three process steps, each of which is staffed with one worker. Assuming you would have to operate as a push system, how would you re-sequences the three activities? How would you implement a pull system

Whistleblowing and sarbanes-oxley due : Use the Internet or Strayer Library to research instances of whistleblowing in publicly traded companies within the last 12 months.

Explain internalisation and externalisation strategies : Explain internalisation and externalisation strategies of Priceline Group' multilingual customer service operation.

Should the old welder be replaced by the new one : St. Johns River Shipyards's welding machine is 15 years old, fully depreciated, and has no salvage value. However, even though it is old, it is still functional as originally designed and can be used for quite a while longer. The applicable corporate..

What should joe do in this situation : What should Joe do in this situation?What ethical theory supports how you think Joe should react to this situation?Why would you use this theory?What might others with a different view than yours say in this situation?How would you refute those oppos..

How you would analyze each parts strengths and weaknesses : Look for the elements and mark them, if that is helpful, reflect on what you read, thinking of how you would analyze each part's strengths and weaknesses. What is unclear? What is unanswered? What more would you have liked to know?

Where in the process is the bottleneck why : What is the utilization of station 2 if work is released into the process at a rate of 5 units per hour? Where in the process is the bottleneck? Why

Develop around the organization : Explain the significance of any ethics-based decision your research finds and the affect it had or has on overallmorale, relationships within the organization, and ultimately overall productivity levels.

User Account

All Pages