What is the total initial cash outflow

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Problem 1: Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $52,500.00 seven years ago. The old equipment currently has no market value. The new equipment cost $51,800.00. The new equipment will be depreciated to zero using straight-line depreciation for the four-year life of the project. At the end of the project the equipment is expected to have a salvage value of $14,000.00. The new equipment is expected to save the firm $30,000.00 annually by increasing efficiency and cost savings. The corporation has tax rate of 32% and a required return on capital of 10.2%.

Question 1: What is the total initial cash outflow? (nearest dollar, show your answer as a negative number)

Question 2: What are the estimated annual operating cash flows? (Calculate your answer to the nearest dollar amount.)

Question 3: What is the terminal cash flow? (Calculate your answer to the nearest dollar.)

Question 4: What is the NPV for this project? (Calculate your answer to the nearest dollar.)

Reference no: EM131760081

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