Since the new equipment is energy-efficient

Assignment Help Financial Management

Reference no: EM132037342

The Genland has approved a project 10 years and the project has 20 years of remaining life. If the old equipment is replaced with the new equipment, the Operating Expenses will decrease by 9 million, since the new equipment is energy-efficient. The old equipment was purchased 10 years ago at a cost of 33 million and was assumed to have no value at the end of its 30-year life. The old equipment can be sold for 16 million today. The new equipment is 40 million and was assumed to have no value at the end of the project. The firm uses straight line depreciation. The marginal tax rate is 20%. If the firm replaces the old equipment now, free cash flow for the next year will A.) Increase by 6.79 million B.) Decrease by 7.82 million C.) Increase by 7.38 million D.) Increase by 7.62 million E.) Decrease by 6.94 million

Reference no: EM132037342

Questions Cloud

The company taxable income during each year : The company's taxable income during each year of its operations. How much did the company pay in taxes during 2014?

Develop situational analysis about healthcare organization : Clinical Management Practice - Clinical Competencies - Develop a situational analysis about the healthcare organization - What is the project initiative

Illustrate an example of product differentiation : Can you illustrate an example of product differentiation? Is this product differentiation important to the sellers and buyers?

Describe supply-siders as supply-and-demanders : Would it be more accurate to describe supply-siders as supply-and-demanders, who object to an overemphasis on aggregate demand

Since the new equipment is energy-efficient : If the old equipment is replaced with the new equipment, the Operating Expenses will decrease by 9 million, since the new equipment is energy-efficient.

Calculate the yield to maturity on these bonds : Calculate the yield to maturity on these bonds. What is the actual average return when coupons are reinvested as in parts 3

What is the socially efficient number of batteries : What is the socially efficient number of batteries? Be sure to show your work. Suppose the government wanted to address the problem by imposing a tax

What is the private optimum of fireworks for the town : a. What is the private optimum of fireworks for the town? b. If it is impossible to purchase a fractional number of fireworks, what is the social optimum

What is efficiency wage theory : What is efficiency wage theory? Will employees shirk more or less and be more or less productive at their jobs when they are paid the above-market equilibrium

User Account

All Pages