Case Assignment Mage Timber Steel (Mape has two option . Keep the old machine, the Mix 750, by peading my nice and impress . By the wandidachine the Delta The proposed in questions Should Magic buy the new mache.caly one NPV aluation is required, which will include the set of the custows of the two options. If the NPV is a positive number, Magic should purchase the new Delfth NTV is a negative er, Magheep the Matris Your team performed NPV calculation and the table is the 4 SU Reper Mar Deretan. 14.00 140 1400 EX 31,5 ch Sale Tere CASH AT DOO OS 340 Net Present of Your team also performed the following sensitivity Change the discount rate to 12 percent Change the Yearseling price of the Delta to $80,000 Change the maintenance costs for the Delta Year 1 cs 1.000. Increasing by $1,000 each year. . Changes of the above factors together The results are as follows Change the core 12 percent NPV 37 Change the Yew of the NTV Change the costs for the Del: Yowwe 1.000 by $1.000 cach year: NPV-51.63 Change all the above factors together: NPV =$1387 Before you make a final reports Mr Davidson you try to other to that we wt been considered in the NPV analysis that might have an impact on the deceative) You identify these facts as bullet points in your final report along with flowesteptheir relevance Case Assignment Magic Timber and Steel (Magic) has two options: Keep the old machine, the Matrix 750, by spending money upfront to service and improve its output. Buy the new and improved machine, the Delta A390. The proposed investment question asks, "Should Magic buy the new machine?" Thus, only one NPV calculation is required, which will include the net of the cash flows of the two options. If the NPV is a positive number, Magic should purchase the new Delta. If the NPV is a negative number, Magic should keep the Matrix. Your team performed NPV calculation and the following table is the result. NPV of Purchasing Delta 1 2 3 4 0 28,000 5 7000 7,000 7,000 7,000 Calculation of Tax Repair costs saved (old) Maintenance saved (old) Major service saved (old) Labour saving (new) Electricity saving (new) Maintenance (new) Depreciation foregone (old) Depreciation (new) Profit/loss on sale (new)" Taxable income Tax payable (saving) 5.250 4.725 -2.000 6.000 -14,000 5,500 4,800 -3.000 6.000 -14,000 7,000 4,000 5.750 4,875 4,000 6,000 -14.000 6,000 4,950 -5.000 6,000 - 14,000 6,250 5,025 -6,000 6,000 - 14,000 -10.000 -5,725 -1,718 28,000 8.400 6,975 2.093 6,300 1.890 9,625 2.888 4,950 1,485 35.000 -140,000 -5,000 28,000 7000 7.000 7000 7,000 4,000 7.000 Cash Flows Sale of MATRIX Cost of DELTA Scrap foregone (old) Repair costs saved (old) Maintenance saved (old) Major service saved (old) Selling price (new) Labour saving (new) Electricity saving (new) Maintenance (new) LESS TAX CASH FLOWS Discount factors at cost of capital Discounted cash flows (DCF) Net Present Value (sum of DCF) 5.250 4,725 -2.000 -2,093 12.883 0.9009 $11.606 -8,400 -85.400 1 $85.400 5,500 4,800 -3.000 -1.890 12.410 0.8116 $10,072 5,750 4,875 -4,000 -2.888 14,738 0.7311 $10.776 60.000 6,250 5,025 -6.000 1.718 68.993 0.5934 $40,944 6,000 4,950 -5,000 -1.485 11,465 0.6587 $7,552 -$4,450 Your team also performed the following sensitivity analysis Change the discount rate to 12 per cent. Change the Year 5 selling price of the Delta to $80,000. Change the maintenance costs for the Delta: Year 1 costs are $1,000, increasing by $1,000 each year. Change all of the above factors together. The results are as follows, Change the discount rate to 12 per cent: NPV = -$7,080 Change the Year 5 selling price of the Delta to $80,000: NPV = $3,858 Change the maintenance costs for the Delta: Year 1 costs are $1,000, increasing by $1,000 each year: NPV = -$1,863 Change all the above factors together: NPV = $3,387 Before you make a final report to Mr. Davidson, you try to think of other factors that have not been considered in the NPV analysis that might have an impact on the decision (quantitative and/or qualitative). You identify these factors as bullet points in your final report, along with a few sentences to explain their relevance. Case Assignment Mage Timber Steel (Mape has two option . Keep the old machine, the Mix 750, by peading my nice and impress . By the wandidachine the Delta The proposed in questions Should Magic buy the new mache.caly one NPV aluation is required, which will include the set of the custows of the two options. If the NPV is a positive number, Magic should purchase the new Delfth NTV is a negative er, Magheep the Matris Your team performed NPV calculation and the table is the 4 SU Reper Mar Deretan. 14.00 140 1400 EX 31,5 ch Sale Tere CASH AT DOO OS 340 Net Present of Your team also performed the following sensitivity Change the discount rate to 12 percent Change the Yearseling price of the Delta to $80,000 Change the maintenance costs for the Delta Year 1 cs 1.000. Increasing by $1,000 each year. . Changes of the above factors together The results are as follows Change the core 12 percent NPV 37 Change the Yew of the NTV Change the costs for the Del: Yowwe 1.000 by $1.000 cach year: NPV-51.63 Change all the above factors together: NPV =$1387 Before you make a final reports Mr Davidson you try to other to that we wt been considered in the NPV analysis that might have an impact on the deceative) You identify these facts as bullet points in your final report along with flowesteptheir relevance Case Assignment Magic Timber and Steel (Magic) has two options: Keep the old machine, the Matrix 750, by spending money upfront to service and improve its output. Buy the new and improved machine, the Delta A390. The proposed investment question asks, "Should Magic buy the new machine?" Thus, only one NPV calculation is required, which will include the net of the cash flows of the two options. If the NPV is a positive number, Magic should purchase the new Delta. If the NPV is a negative number, Magic should keep the Matrix. Your team performed NPV calculation and the following table is the result. NPV of Purchasing Delta 1 2 3 4 0 28,000 5 7000 7,000 7,000 7,000 Calculation of Tax Repair costs saved (old) Maintenance saved (old) Major service saved (old) Labour saving (new) Electricity saving (new) Maintenance (new) Depreciation foregone (old) Depreciation (new) Profit/loss on sale (new)" Taxable income Tax payable (saving) 5.250 4.725 -2.000 6.000 -14,000 5,500 4,800 -3.000 6.000 -14,000 7,000 4,000 5.750 4,875 4,000 6,000 -14.000 6,000 4,950 -5.000 6,000 - 14,000 6,250 5,025 -6,000 6,000 - 14,000 -10.000 -5,725 -1,718 28,000 8.400 6,975 2.093 6,300 1.890 9,625 2.888 4,950 1,485 35.000 -140,000 -5,000 28,000 7000 7.000 7000 7,000 4,000 7.000 Cash Flows Sale of MATRIX Cost of DELTA Scrap foregone (old) Repair costs saved (old) Maintenance saved (old) Major service saved (old) Selling price (new) Labour saving (new) Electricity saving (new) Maintenance (new) LESS TAX CASH FLOWS Discount factors at cost of capital Discounted cash flows (DCF) Net Present Value (sum of DCF) 5.250 4,725 -2.000 -2,093 12.883 0.9009 $11.606 -8,400 -85.400 1 $85.400 5,500 4,800 -3.000 -1.890 12.410 0.8116 $10,072 5,750 4,875 -4,000 -2.888 14,738 0.7311 $10.776 60.000 6,250 5,025 -6.000 1.718 68.993 0.5934 $40,944 6,000 4,950 -5,000 -1.485 11,465 0.6587 $7,552 -$4,450 Your team also performed the following sensitivity analysis Change the discount rate to 12 per cent. Change the Year 5 selling price of the Delta to $80,000. Change the maintenance costs for the Delta: Year 1 costs are $1,000, increasing by $1,000 each year. Change all of the above factors together. The results are as follows, Change the discount rate to 12 per cent: NPV = -$7,080 Change the Year 5 selling price of the Delta to $80,000: NPV = $3,858 Change the maintenance costs for the Delta: Year 1 costs are $1,000, increasing by $1,000 each year: NPV = -$1,863 Change all the above factors together: NPV = $3,387 Before you make a final report to Mr. Davidson, you try to think of other factors that have not been considered in the NPV analysis that might have an impact on the decision (quantitative and/or qualitative). You identify these factors as bullet points in your final report, along with a few sentences to explain their relevance