Chapter 11, Problem 019 A division of Raytheon owns a 5-year-old turret lathe used to manufacture fabricated metal products that was purchased for $96,000 and now has a market value of $18,000. The expected decline in market value is $3,000 per year from this point forward to a minimum of S3.000 ?? costs are 000 per year. Additional capability is needed. If the old lathe is kept, that new capability will be contracted out for $13,000, assumed payable the end of each year. A new turret lathe has the increased capability to fulill all needs, replacing the existing turret lathe and requiring no outside g. It can be purchased for $65,000 and will have an expected life of 8 years. Its market value is expected to be S65 00 athe end of to equal $10,000. If the after-tax MARR is 9 percent, the tax rate is 40 percent, and the planning horizon is 8 years, determine whether to keep and use a contractor or to sell and buy new. Click here to access the TVM Factor Table Calculator Clearly show the cash flow profile for each alternative using the cash flow approach (insider's viewpoint approach). EOY Keep existing turret lathe and contract out Replace with new turret lathe 4. Chapter 11, Problem 019 A division of Raytheon owns a 5-year-old turret lathe used to manufacture fabricated metal products that was purchased for $96,000 and now has a market value of $18,000. The expected decline in market value is $3,000 per year from this point forward to a minimum of S3.000 ?? costs are 000 per year. Additional capability is needed. If the old lathe is kept, that new capability will be contracted out for $13,000, assumed payable the end of each year. A new turret lathe has the increased capability to fulill all needs, replacing the existing turret lathe and requiring no outside g. It can be purchased for $65,000 and will have an expected life of 8 years. Its market value is expected to be S65 00 athe end of to equal $10,000. If the after-tax MARR is 9 percent, the tax rate is 40 percent, and the planning horizon is 8 years, determine whether to keep and use a contractor or to sell and buy new. Click here to access the TVM Factor Table Calculator Clearly show the cash flow profile for each alternative using the cash flow approach (insider's viewpoint approach). EOY Keep existing turret lathe and contract out Replace with new turret lathe 4
