What is the NPV

Assignment Help Financial Accounting
Reference no: EM132733352

Problem - St. Johns River Shipyard's welding machine is 15 years old, fully depreciated, and has no salvage value. However, even though it is old, it is still functional as originally designed and can be used for quite a while longer. A new welder will cost $182,500 and have an estimated life of 8 years with no salvage value. The new welder will be much more efficient, however, and this enhanced efficiency will increase earnings before depreciation from $27,000 to $74,000 per year. The new machine will be depreciated over its 5-year MACRS recovery period, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The applicable corporate tax rate is 25%, and the project cost of capital is 12%. What is the NPV if the firm replaces the old welder with the new one?

Reference no: EM132733352

Questions Cloud

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
Is variable costing income statement applicable and explain : Explain, Is variable costing income statement applicable to service operations? If so, provide a hypothetical example of variable costing income statements
Faulty design or construction technique : A written paper on a building that has failed or collapsed due to a faulty design or construction technique.
What is the NPV : The applicable corporate tax rate is 25%, and the project cost of capital is 12%. What is the NPV if the firm replaces the old welder with the new one
How do produce the necessary closing entries : How do Produce the necessary closing entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually)
What is the present value of future cash flows : The firm uses only equity, and it has a cost of capital of 15%. What is the present value of future cash flows
Personal protective equipment : Firefighters are required to wear specialized protective gear when fighting fires. Known more commonly as personal protective equipment,
What sales would be needed to increase the company : Margin of safety ratio (M0596) at the current sales level is 27%. What sales (in dollars) would be needed to increase the company's MOS% to 38%?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Which the proper entry on january includes

The next payday, January 5, the firm paid $2,500 in wages. The company makes reversing entries. The proper entry on January 5 includes

  Find what is the transition date of icon international

Find What is the transition date of Icon International? Icon International, a software company, incorporated on January 1, 2013 is planning to convert to IFRS

  Evaluation of criteria for internal control systemfor each

evaluation of criteria for internal control system.for each of these five separate cases identify the principle of

  How much of the amount paid was on the interest

Suppose I purchase a house for $300,000. To purchase it, I take out a 20 year loan worth $250,000 at an annual interest rate of 5.2% compounded quarterly. How much should my quarterly loan payments be in order to pay off the loan after exactly 20 yea..

  Part inbsppresented below are the trial balance and the

part inbsppresented below are the trial balance and the other information related to josephine gray a tax consultant.1.

  Determine total cost allocation

Determine the total cost allocation and departmental overhead rate for the producing departments using the direct method. Show your work.

  Manufacturing overhead on the basis of machine-hours

Acitelli Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. Estimated manufacturing overhead $357,000 Estimated machine hours 8,500 Actual manufactu..

  How would the bond issue be recorded at the fund

This year, Temp County issued $3,00,000, How would the bond issue reported in the fund financial statements and the government-wide financial statements?

  Prepare the entry to record depreciation

Leighton Company purchased equipment for $510,000 which was estimated to have a useful life of 10 years with a salvage value of $10,000 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2014, it is determ..

  Determine how much can nelsons short-term debt

Determine How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 1.8? Do not round intermediate calculations.

  What is the firms expected rate of return

chance of producing a -16% return. What is the firm's expected rate of return (in percent)

  How do treat a customer who takes a loan

How do treat a customer who takes a loan but also places deposits with the bank? ALI'S CONCERNS Ali said that First Commercial had 20 branches spread

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd