A new machine with a cost basis of $50,000 and falls in a MACRS 3 year class. It will save $0.50 per unit in cost, and the expectation is 50,000 units per year of production. How much will NOPAT increase by in the first year if the tax rate is 35%?

K&M Winery has an old wine press that the company wants to replace with a more efficient press. The new press costs $110,000 with an additional $10,000 in installation costs. The old press was purchased two years ago for a cost of $60,000 and $10,000 in installation costs. It can be sold for a price of $40,000 today. The old press was depreciated under the MACRS 3-year recovery schedule while the new press will be depreciated under the MACRS 5-year recovery schedule. K&M Winery projects revenues to be $250,000 more with the new press each year for the next three years. Expenses are 80% of sales. The firm is in the 21% tax rate.

Calculate the tax effect from the sale of the existing asset.

A new delivery truck can be purchased for $30,000. The old one could be sold today for $5,000, and has a book value of $3,000. In three years, the old truck will have a salvage value of $1,000 (and no book value). The new truck would be depreciated on a 5 year MACRS schedule. The firms tax rate is 21%. The n

If the old truck is sold and the new one bought, and the new truck will save the firm $1,000 a year in gas expenses, and assuming the new truck would have a salvage value of $10,000 in year 3, what is the replacement project's NPV if the firms WACC is 15%?