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A company is considering replacing one of the old machines used in the manufacturing process. The machine was purchased 2 years ago for $600,000 This
A company is considering replacing one of the old machines used in the manufacturing process. The machine was purchased 2 years ago for $600,000 This machine is being depreciated on a straight-ine basis, and it has 4 years of remaining life. When this machine was purchased 2 years ago, it was assumed to have zero sakage value at the end of its useful life of 6 years. Currently, this machine has a market value of $250,000. The company intends to keep this old machine as spare if the replacement happens. The current revenue generated by this machine is nually nanm a The replacement machine will cost of $850,000 and $50.000 for shipping and transportation to the company's location The new 45%, 15% and 7% The replacement machine would permit a machine falls into 3-year MACRS (33%, n output expansion, so sales will become $450,000 per year. Even so, the new machine's greater achine would require inventories be increased by $65,000, but accounts payable new machine can be sold at the end of the project's life for $50,000 while the old 2%. Should the would cause o would simultaneously increase by $10.000 The replacement project life is 4 years. The machine will not have any value at the end of the 4th year. The company's marginal federal-plus-state tax rate is 40 company replace the old machine? What is cash flow CF1 to be used in NPV calculations? 246,800 256,400 278.600 232,800 312.400
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