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AL-BAZAR Company is contemplating the purchase of a new grinder to replace the existing grinder. The existing grinder was purchased 2 years ago at an

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AL-BAZAR Company is contemplating the purchase of a new grinder to replace the existing grinder. The existing grinder was purchased 2 years ago at an installed cost of $55,300; it was being depreciated straight-line for 5 years. The existing grinder is expected to have a usable life of 5 more years. The new grinder costs $105,800 and requires $4,500 in installation costs; it has a 5-year usable life and would be depreciated on a straight-line basis. AL- BAZAR can currently sell the existing grinder for $70,900 without incurring any removal or cleanup costs. To support the increased business resulting from the purchase of the new grinder, accounts receivable would increase by $40,400, inventories by $29,000, and accounts payable by $57,600. At the end of 5 years, the existing grinder would have a market value of zero; the new grinder would be sold to net $29,200 after removal and cleanup costs increase by $40,400, inventories by $29,000, and accounts payable by $57,600. At the end of 5 years, the existing grinder would have a market value of zero; the new grinder would be sold to net $29,200 after removal and cleanup costs and before taxes and all the funds invested in NWC will be recovered. The firm is subject to a 40% tax rate. 1 20% 2 326 3 1996 126 LO 12% 6 596 the Existing grinder currently produced 500,000 units per year for 5 years, AL- BAZAR financial analyst expecting that the new grinder will increase production by 5% per year. the price per unit produced is $1000 and it is expected to be unchanged to maintain the 50% market share, on the other hand, the total production cost per unit is $400 and it is expected to grow by 7% each year for the new grinder only. if you know that the market size is 1,000,000 calculate the following: Calculate pi? Choose... Accumulated depreciation at the end of the second Year of the existing grinder Choose... > Determine the terminal cash flow expected at the end of year 5 from the proposed grinder replacement Choose... Time left 1:36:46 Determine if the Financial manager of AL- BAZAR company should accept or reject the replacement decision based on discounted Payback period (the cut-off period is 3 years) Choose... Time left 1:36:23 Determine the incremental operating cash flows in year 3 associated with the proposed grinder replacement Choose... if the market share increases to 55% in the fifth year of the. new grinder life calculate the NPV Choose... Time left 1:35:48 Determine the incremental operating cash flows in year 5 associated with the proposed grinder replacement Choose... calculate the initial investment associated with the replacement of the existing Choose... grinder by the new one . HILTIOII 1.2 Determine the incremental operating cash flows in year 2 associated with the proposed grinder replacement > Choose... Calculate the Discounted payback period of the new grinder, market rate=65% Choose... Time left 1:35:04 Calculate the NPV market rate =65% Choose... After-tax proceeds from sale of new grinder Choose... Determine the incremental operating cash flows in year 1 associated with the proposed grinder replacement Choose... Time left 1:34:43 Determine the incremental operating cash flows in year 4 associated with the proposed grinder replacement Choose... Determine the total cash flows in year 5 associated with the proposed grinder replacement Choose

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