Reference no: EM132733359
Problem - The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $55,000. It had an expected life of 10 years when it was bought, and its remaining depreciation is $5,500 per year for each year of its remaining life. As older flange-lippers are robust and useful machines, this one can be sold for $20,000 at the end of its useful life.
A new high-efficiency, digital-controlled flange-lipper can be purchased for $120,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $30,000 per year, although it will not affect sales. At the end of its useful life, the high-efficiency machine is estimated to be worthless. MACRS depreciation will be used, and the machine will be depreciated over its 3-year class life rather than its 5-year economic life, so the applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%.
The old machine can be sold today for $35,000. The firm's tax rate is 25%, and the appropriate cost of capital is 16%.
Required -
a. If the new flange-lipper is purchased, what is the amount of the initial cash flow at Year 0?
b. What are the incremental cash flows that will occur at the end of Years 1 through 5?
c. What is the NPV of this project? Should Everly replace the flange-lipper?
What are budgeted revenues for february
: What are budgeted revenues for February? Parker Corp., which operates on a calendar year, expects to sell 6,860 units in January
|
How the social worker might have used the ecological model
: Submit a 3- to 4-page paper in which you review the approach taken by the social worker in Brandon's case. Identify how the social worker might have used.
|
Analyze the process of implementing analytics tool
: Analyze the process of implementing an analytics tool for the client.
|
Prepare the adjusting journal entries for crane co
: Prepare the adjusting journal entries. Crane Co. provides music lessons to many clients across the city. On October 1, 2020, the company had a balance of $1,820
|
What are the incremental cash flows
: The old machine can be sold today for $35,000. The firm's tax rate is 25%, and the appropriate cost of capital is 16%. What are the incremental cash flows
|
Developing good business sense
: Many people take the way goods and services are provided to them for granted. They do not think about the nature of the operating system that produces
|
Why is the preparation and education important
: What additional preparation or education would you need to effectively treat the following: Families, adolescents, persons of color, persons from different.
|
How would treat the transaction
: On January 1, 2019, LLI issued 10,000 10-year, Under IFRS, how would you treat this transaction? Has it been accounted for correctly?
|
What are the project expected NPV
: Shao Industries is considering a proposed project for its capital budget. What are the project's expected NPV, standard deviation, and coefficient of variation
|