Reference no: EM133012188
Problem - Replacement Analysis - The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $60,000. It had an expected life of 10 years when it was bought and its remaining depreciation is $6,000 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 $45,000 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 $50,000. The firm's tax rate is 25%, and the appropriate cost of capital is 12%.
Required -
1. If the new flange-lipper is purchased, what is the amount of the initial cash flow at Year 0? Round your answer to the nearest dollar. Cash outflow, if any, should be indicated by a minus sign.
2. What are the incremental net cash flows that will occur at the end of Years 1 through 5? Do not round intermediate calculations. Round your answers to the nearest dollar. Cash outflows, if any, should be indicated by a minus sign.
3. What is the NPV of this project? Do not round intermediate calculations. Round your answer to the nearest whole dollar. Negative value, if any, should be indicated by a minus sign.
What is the earnings before interest and taxes
: What is the earnings before interest and taxes under the expected case scenario? The company expects to sell 12,000 units, give or take 4%.
|
What is the adjusting entry for the accrued interest
: On November 1, Alan Company signed a 120-day, 9% note payable, with a face value of $25,200. What is the adjusting entry for the accrued interest
|
Implementing a team performance management system
: Your organization is considering implementing a team performance management system and has asked you to provide information about the performance dimensions you
|
Determine the cash received from financing
: Determine the cash received from financing. On Julv 23. Plitt Company factored P300,000 in accounts receivable for cash of P280,000.
|
What is the amount of the initial cash flow
: If the new flange-lipper is purchased, what is the amount of the initial cash flow at Year 0? Round your answer to the nearest dollar. Cash outflow
|
Calculate the total cash received from factoring
: Calculate the total cash received from factoring, Including realization Of Keceivable from ractor. Calculate the partial cash received trom factoring.
|
How will clean sweep statement of cash flows be affected
: If Clean Sweep, Inc. bought brooms for $100 and sells them for $200 in cash. As a result, how will Clean Sweep's statement of cash flows be affected?
|
Measure organizational development intervention
: What are the various ways to measure organizational development intervention results and impacts
|
Representative of effective leadership
: Compare and contrast transactional vs transformational leadership styles as to why they would or would not be representative of effective leadership in the face
|