Answered step by step
Verified Expert Solution
Question
1 Approved Answer
ADAM COMPANY HAS AN OLD MACHINE THAT COST WHEN PURCHASED $150000, THE FIRM DEPRECIATION METHOD IS MACRS FOR 3 YEARS (PERCENTAGED Y1 =33% Y2 45%,Y3=15%
ADAM COMPANY HAS AN OLD MACHINE THAT COST WHEN PURCHASED $150000, THE FIRM DEPRECIATION METHOD IS MACRS FOR 3 YEARS (PERCENTAGED Y1 =33% Y2 45%,Y3=15% Y4=7%) THE EXPECTED SELLING PRICE OF THE OLD MACHINE IS 75000 ADAM CAN BUY A NEW MACHINE WITH PRICE $165000 AND INSTALLATION COST OF $7000 AND SHIPPMENT $ 4000 IT WILL ALSO BE DEPRECIATED USING MACRS. THE MACHINE REQUIRES RECEIVABLES TO INCREASE 12200 INVENTORY 17000 AND ACCOUNT PAYABLE WILL INCREASE BY $16000 REVENUES ARE EXPECTED TO BE 120000 AND EXPENSES ARE 60% OF REVENUES FOR THE 3 YEARS IF THE NEW MACHINE CAN BE SOLD AT THE END OF THE 3 YEARS FOR $24000 AND TAXES IS 38%,K IS 0.13 WHAT IS THE INITIAL INVESTMENT? WHAT IS THE DISCOUNTED OPERATING CASH FLOW FOR THE 3 YEARS ? WHAT IS THE TERMINAL VALUE? WHAT IS THE TERMINAL VALUE? WHAT IS THE NPV
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started