What are the annual incremental net cash flows

Assignment Help Financial Management

Reference no: EM131606018

Moonlight Company is considering automated baking equipment that costs $450,000 installed and would replace the present hand-made production method. The present equipment has zero book value and zero salvage value. The new equipment will not increase revenues but will reduce operating costs (excluding depreciation) from a current level of $600,000 to $350,000 per year. The depreciation of the new equipment will be $69,000 per year. Assume a marginal tax rate of 40 percent. What are the annual incremental net cash flows?

Reference no: EM131606018

Questions Cloud

Required dividend amount for preferred stock : Investors require a 4% return on stock investment. Assume the required dividend amount for TY preferred stock is $6.00.

Inflation rate for the company region is currently estimated : The inflation rate for the company's region is currently estimated at 3.5%. The real rate of rerturn on these bonds is ______%.

What are the annual net cash flows associated : What are the annual net cash flows associated with the purchase of this machine?

What is the operating leverage phenomenon : What is the operating leverage phenomenon and what causes it?

What are the annual incremental net cash flows : What are the annual incremental net cash flows?

Calculate the plant net investment : The Jacob Chemical Company is considering building a new potassium sulfate plant. Calculate the plant’s net investment (NINV).

Determine the rate of return on investment : Assuming that the security is held until maturity, the investor will receive $100,000 (face amount) but no interest. Determine the rate of return on investment.

Market risk premium and risk-free rate : If the risk-free rate is 5.5% and the market risk premium is 6.8%, are these stocks correctly priced?

Difference between controllable and uncontrollable cost : What is the difference between controllable and uncontrollable cost, give an example of each.

User Account

All Pages