Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

asap please Q4) Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $66,790.00 seven years ago. The old equipment

asap please
image text in transcribed
Q4) Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $66,790.00 seven years ago. The old equipment currently has no market value. The new equipment cost $60,924.00. The new equipment will be depreciated to zero using straight-line depreciation for the four-year life of the project. At the end of the project the equipment is expected to have a salvage value of $30,076.00. The new equipment is expected to save the firm $27,471.00 annually by increasing efficiency and cost savings. The corporation has tax rate of 35.24% and a required return on capital of 13.57% a) What is the total initial cash outflow? (show as negative number 2.5 Points) b) What are the estimated annual operating cash flows? (2.5 Points) c) What is the terminal cash flow? (2.5 Points) d) What is the NPV for this project? (2.5 Points)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Economics Of Money Banking And Finance

Authors: Howells, Keith Bain

3rd Edition

0273693395, 978-0273693390

More Books

Students also viewed these Finance questions