$5$You are a Chief Executive Officer of the ACME Corporation. The firm plans to replace new machines to improve the

production system costing $$1,129,000.$ The new machines are expected to last five years with a salvage value of $12\%$

of the original cost. During this time, the company will use a $30\%$ CCA rate. The new machines will save $$385,000$

annually before taxes.

The company's required rate of return is $6\%$ and the corporate tax rate is $35\%.$ The new production system requires

the firm to increase net working capital by $$850,000.$ Based on the given information, answer questions a and $b.$

a$)$ Please determine the PVCCATS of the purchase based on the given information. Please show all the calculations

by which you came up with the final answer. $(3$ Points$)$

b$)$ Please calculate the net present value $($NPV$)$ based on the given information. Please show all the calculations by

which you came up with the final answer. $(3$ Points$)$

$)$

$$You are a Chief Executive Officer of the ACME Corporation. The firm plans to replace new machines to improve the production system costing $

$1$

$,$

$1$

$2$

$9$

$,$

$0$

$0$

$0$

$.$

$$The new machines are expected to last five years with a salvage value of

$1$

$2$

$\%$

$$of the original cost. During this time, the company will use a

$3$

$0$

$\%$

$$CCA rate. The new machines will save $

$3$

$8$

$5$

$,$

$0$

$0$

$0$

$$annually before taxes.

The company's required rate of return is

$6$

$\%$

$$and the corporate tax rate is

$3$

$5$

$\%$

$.$

$$The new production system requires the firm to increase net working capital by $

$8$

$5$

$0$

$,$

$0$

$0$

$0$

$.$

$$Based on the given information, answer questions a and b

$.$

a

$)$

$$Please determine the PVCCATS of the purchase based on the given information. Please show all the calculations by which you came up with the final answer.

$($

$3$

$$Points

$)$

$$

b

$)$

$$Please calculate the net present value

$($

NPV

$)$

$$based on the given information. Please show all the calculations by which you came up with the final answer.

$($

$3$

$$Points

$)$

You are a Chief Executive Officer of the ACME Corporation. The firm plans to replace new machines to improve the

production system costing $

$1$

$,$

$1$

$2$

$9$

$,$

$0$

$0$

$0$

$.$

$$The new machines are expected to last five years with a salvage value of

$1$

$2$

$\%$

of the original cost. During this time, the company will use a

$3$

$0$

$\%$

$$CCA rate. The new machines will save $

$3$

$8$

$5$

$,$

$0$

$0$

$0$

annually before taxes.

The company's required rate of return is

$6$

$\%$

$$and the corporate tax rate is

$3$

$5$

$\%$

$.$

$$The new production system requires

the firm to increase net working capital by $

$8$

$5$

$0$

$,$

$0$

$0$

$0$

$.$

$$Based on the given information, answer questions a and

$$

$.$

a

$)$

$$Please determine the PVCCATS of the purchase based on the given information. Please show all the calculations

by which you came up with the final answer.

$($

$3$

$$Points

$)$

b

$)$

$$Please calculate the net present value

$($

NPV

$)$

$$based on the given information. Please show all the calculations by

which you came up with the final answer.

$($

$3$

$$Points

$)$