What is the npv of the replacement project

Assignment Help Financial Management
Reference no: EM131575817

NewArt Inc. makes and sells artistic prints. The firm is considering replacing one of its printers. Both the new and the old printer would last another 5 years. Annual sales will remain constant. The old printer has been fully depreciated and has no resale value. The new printer costs $48,000 today and will also have no resale value in 5 years. The new printer doesn't require any additional net working capital, but it produces after-tax cash flows from labor and material savings of $13,000 per year. The cost of capital is 10%.

What is the NPV of the replacement project?

Reference no: EM131575817

Questions Cloud

You have made no additional contributions to the? account : What annual rate of return have you earned? (you have made no additional contributions to the? account)?
How much must be repaid every? year : If the home buyer borrows $100,000 from the? bank, how much must be repaid every? year?
Project the annual free cash flows ?of buying the chains : Project the annual free cash flows ?(FCF?) of buying the chains. Compute the NPV of buying the chains from the FCF.
What is your total profit or loss on your investment : you purchased a put option on WXX stock with a strike price of exist60 and an option price of exist.60. what is your total profit or loss on your investment?
What is the npv of the replacement project : NewArt Inc. makes and sells artistic prints. The firm is considering replacing one of its printers. What is the NPV of the replacement project?
What is the tax revenue generated by the excise tax : Government officials in Kansas impose an excise tax of $0.30 per gallon of gasoline sold in the state. What is the tax revenue generated by the excise tax
What are the incremental earnings-what is the free cash flow : Creminy, Inc. estimates revenue of $70,000, costs of $35,000, and depreciation of $8,000 related to a new project. What are the incremental earnings?
What capital budgeting model is defined : What capital budgeting model is defined as the discount rate that makes NPV equal to zero?
What is the after-tax salvage value and current book value : What is the annual depreciation? What is the current book value? What is the after-tax salvage value (ATSV)?

Reviews

Write a Review

Financial Management Questions & Answers

  Loan outstanding-indifferent to the two forms of payment

You have a loan outstanding. what final payment will the bank require you to make so that it is indifferent to the two forms of payment?

  What is estimate of the stock current intrinsic value

Paradise Retailers, Inc. just paid a dividend of $2.25. Analysts expect the company's dividend to grow by 40% this year, by 25% in Year 2, and at a constant rate of 6% in Year 3 and thereafter. The required return on PRI's stock is 13.00%. What is th..

  Estimate marpors value with the new leverage

Estimate Marpor's value without leverage. Estimate Marpor's value with the new leverage.

  Times-interest-earned ratio

Times-Interest-Earned Ratio The Morris Corporation has $250,000 of debt outstanding, and it pays an interest rate of 9% annually. Morris's annual sales are $1.25 million, its average tax rate is 40%, and its net profit margin on sales is 6%. If the c..

  What are the portfolio weights of each stock

Portfolio Weights An investor owns $15,000 of Adobe Systems stock, $19,000 of Dow Chemical, and $29,000 of Office Depot. What are the portfolio weights of each stock?

  Check out starbucks quite extensive sustainability efforts.

1. check out Starbucks quite extensive sustainability efforts. Starbucks: Environmental Sustainability 2. Research sustainability efforts of Starbucks, human sustainability, environmental sustainability, another creative approach to sustainability th..

  What is the stock required rate of return

Nick's Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $3 at the end of each year. The preferred sells for $55 a share. What is the stock's required rate of return (assume the market is in equilibrium with the required..

  Calculate the degree of financial

Suppose a company has debt of $240,000 and the cost of debt is 15%, the common stock outstanding is 2,000 shares, and a tax rate of 40%. Currently, the EBIT is $80,000. Calculate the EPS of the company. Calculate the degree of financial (DFL).

  Industries just paid dividend-what is the value of today

Could I Industries just paid a dividend of $1.87 per share. what is the value of the stock today?

  About the annual pretax cost savings

Warmack Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $450,000 is estimated to result in $180,000 in annual pretax cost savings

  Decisions include determining when long term investments

Capital budgeting decisions include determining when long term investments, such as an equipment purchase, are necessary and worth pursuing. One method of capital budgeting process is to determine the Net Present Value. Discuss in detail how to calcu..

  How much tax revenue does the government recieve

Suppose that the government imposes a $5 excise tax on each case of beer. How much tax revenue does the government recieve?

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