Reference no: EM132133127
The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $70,000. It had an expected life of 10 years when it was bought and its remaining depreciation is $7,000 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 $160,000, 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 $40,000. The firm's tax rate is 35%, and the appropriate cost of capital is 14%.
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 net 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?
|
Find the mirr-should timco buy it
: It should provide after tax cash inflows of 5000 per year for the next 6 years. The cost of funds is 10%. Find the MIRR. Should Timco buy it?
|
|
Considerations do you need to take when considering
: 1. What considerations do you need to take when considering "time value of money"?
|
|
Find the wacc
: The firm can borrow at 6%. The tax rate is 40%. Let the firm beta be 1.9, the market return 14%, and the risk free rate 2%. Find the WACC.
|
|
Find the replacement chain value needed
: Project Q costs 240. It provides inflows of 120 per year for three years. The cost of funds is 6%. Find the replacement chain value needed to compare it to a si
|
|
What is the npv of project
: a. If the new flange-lipper is purchased, what is the amount of the initial cash flow at Year 0?
|
|
Replacing the latex molding machine
: DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model.
|
|
Tax sheltered retirement plan
: This person forgoes consumption and instead places $230 into a tax sheltered retirement plan every month. What are the yearly tax savings due to these retiremen
|
|
Write a monitor to coordinate access to the file
: The process priority number must be greater than or equal to the priority numbers all of the other processes that are currently accessing the file.
|
|
Compute rippard net profit margin
: Rippard's has a debt ratio of 15%, a total asset turnover ratio of 3.0 and a return on equity (ROE) of 48%. Compute Rippard's net profit margin.
|