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Assume a firm is considering replacing a machine that will increase EBITDA from $20,000 to $51,000 per year. The new machine will cost $100,000 and
- Assume a firm is considering replacing a machine that will increase EBITDA from $20,000 to $51,000 per year. The new machine will cost $100,000 and has a life of 8 years. The firms tax rate is 40%, and the cost of capital is 12%. The straight-line depreciation method will be used for tax purposes.
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- Assume that the old machine has a book value of $40,000 and still has a useful life of 8 years, but can be sold today for a salvage value of $15,000. Further assume that the new machine will have a salvage value of $12,000. Should the replacement be made?
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Digital Finance Big Data Start-ups And The Future Of Financial Services
Authors: Perry Beaumont
1st Edition
0367146797, 978-0367146795
