Weirs trucking inc is considering the purchase4 of a new

Reference no: EM13609918

Weir's Trucking, Inc. is considering the purchase4 of a new production machine for $105,000. The purchase of this new machine will result in an increase in earnings before interest and taxes of $26,000 per year. To operate this machine properly, workers would have to go to install this machine correctly. Also, because this machine is extremely efficient, its purchase would necessitate an increase in inventory of $24,000. This machine has an expected life of 10 years, after which it will have no salvage value. Finally, to purchase the new machine, it appears that the firm would have to borrow $90,000 at 10% interest from its local bank, resulting in additional interest payments of $9,000 per year. assume simplified straight-line depreciation, thta this machine is being depreciated down to zero, a 36% marginal tax rate, and a required rate of return of 14% a. What is the initial outlay associated with this project? b. What are the annual after-tax cash flows associated with this project for years 1 through 9?

Reference no: EM13609918

Questions Cloud

There are 18 turns in the primary coil and 20 turns in the : a transformer consisting of two coils wrapped around an iron core is connected to a generator and a resistor as shown

You bought a home theatre 1 year back using hsbc bank : you bought a home theatre 1 year back using hsbc bank credit card. hsbc bank has sent you a bill now which shows that

A truck travels 315 km north and then makes a 90deg left : a truck travels 3.15 km north and then makes a 90deg left turn and drives another 4.00 km. the whole trip takes 4.50

Tomorry company acquires a delivery truck at a cost of : tomorry company acquires a delivery truck at a cost of 22600. the truck is expected to have a salvage value of 6100 at

Weirs trucking inc is considering the purchase4 of a new : weirs trucking inc. is considering the purchase4 of a new production machine for 105000. the purchase of this new

What is the difference between a merger and consolidation : what is the difference between a merger and consolidation? list and explain the motives of mergers and

A block with mass m 3 kg is sitting on the ground and not : a block with mass m 3 kg is sitting on the ground and not moving. the acceleration due to gravity is g 9.81 ms2.

Your company is considering the replacement of an old : your company is considering the replacement of an old delivery van with a new one that is more efficient. the old van

Maintenance costs for a small bridge with expected 50-year : maintenance costs for a small bridge with expected 50-year life are estimated to be 1000 each year for the first 5

User Account

All Pages