eBook Replacement Analysis Video Check My Work (1 remaining) The Gilbert Instrument Corporation is considering replacing...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/6655d61b4a019_4036655d61b3ef61.jpg)
Transcribed Image Text:
eBook Replacement Analysis Video Check My Work (1 remaining) The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of remaining life. If kept, the steamer will have depreciation expenses of $650 for 5 years and $325 for the sixth year. Its current book value is $3,575, and it can be sold on an Internet auction site for $4,075 at this time. If the old steamer is not replaced, it can be sold for $800 at the end of its useful life. Gilbert is considering purchasing the Side Steamer 3000, a higher-end steamer, which costs $12,700 and has an estimated useful life of 6 years with an estimated salvage value of $1,600. This steamer falls into the MACRS 5-years class, so the applicable depreciation rates are 20.00 %, 32.00 %, 19.20%, 11.52 %, 11.52 %, and 5.76 %. The new steamer is faster and allows for an output expansion, so sales would rise by $2,000 per year; the new machine's much greater efficiency would reduce operating expenses by $1,700 per year. To support the greater sales, the new machine would require that inventories increase by $2,900, but accounts payable would simultaneously increase by $700. Gilbert's marginal federal-plus-state tax rate is 25%, and the project cost of capital is 14%, What is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar. $ Should it replace the old steamer? The old steamer -Select- be replaced. Jean Key Check My Work (1 remaining) eBook Replacement Analysis Video Check My Work (1 remaining) The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of remaining life. If kept, the steamer will have depreciation expenses of $650 for 5 years and $325 for the sixth year. Its current book value is $3,575, and it can be sold on an Internet auction site for $4,075 at this time. If the old steamer is not replaced, it can be sold for $800 at the end of its useful life. Gilbert is considering purchasing the Side Steamer 3000, a higher-end steamer, which costs $12,700 and has an estimated useful life of 6 years with an estimated salvage value of $1,600. This steamer falls into the MACRS 5-years class, so the applicable depreciation rates are 20.00 %, 32.00 %, 19.20%, 11.52 %, 11.52 %, and 5.76 %. The new steamer is faster and allows for an output expansion, so sales would rise by $2,000 per year; the new machine's much greater efficiency would reduce operating expenses by $1,700 per year. To support the greater sales, the new machine would require that inventories increase by $2,900, but accounts payable would simultaneously increase by $700. Gilbert's marginal federal-plus-state tax rate is 25%, and the project cost of capital is 14%, What is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar. $ Should it replace the old steamer? The old steamer -Select- be replaced. Jean Key Check My Work (1 remaining)
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Don Berthrong, the manager of the local Books-A-Million, is wondering whether adjusting entries will affect his financial statements. Don's business has grown steadily for several years, and Don...
-
1. Cite reasons for and against rebuilding Greensburg as a "green town." Which reasons do you find most convincing and why? 2. Do you think Greensburg's decision-making process was effective,...
-
2. Does Pop use a one-line consolidation in accounting for its investment in Son? Explain your answer.
-
Identifying product and period costs Required Indicate whether each of the following costs is a product cost or a period (selling and administrative) cost. a. Advertising expense. b. Insurance on...
-
Explain the term Portfolio and cite an example (3 marks) b) An investor holds the following four (4) portfolios A 14 6 B 12 5 C 11 8 D 17 9 If the market return is 12% with a standard deviation of 5%...
-
Jan and Sue have engaged successfully as partners in their law firm for a number of years. Soon after their state?s incorporation laws are changed to allow professionals to incorporate, the partners...
-
Time Management Make a list of specific ways you procrastinate on homework, studying, and other school-related work. Which of those ways might be reduced or eliminated by using a term plan or daily...
-
Shamika conducts a study comparing the performance of individuals on the first quiz in each of two classes taken in the first term of their freshman year. The scores, out of 100, are provided for...
-
Adult Sleep Times (hours) of sleep for randomly selected adult subjects included in the National Health and Nutrition Examination Study are listed below. Here are the statistics for this sample: n =...
-
Topic: I made a couple changes X Zag HCHW Ch 2 (31) (1).pdf X W2ag HW Ch 1 (20) - Physics 2ag X /Desktop%20user/Downloads/2ag%20HCHW%20Ch%202%20(31) %20(1).pdf f o search Hi 2/14 - I + 90% + 1.1 a....
-
Cashless Society. 40% of consumers believe that cash will be obsolete in the next 20 years (based on a survey by J.P. Morgan Chase). In each of Exercises 15-20, assume that 8 consumers are randomly...
-
Pacifico Company, a U . S . - based importer of beer and wine, purchased 1 , 3 0 0 cases of Oktoberfest - style beer from a German supplier for 3 1 2 , 0 0 0 euros. Relevant U . S . dollar exchange...
-
Aidan and Benjamin are neighbors in a subdivision. There is an undeveloped lot between their homes that is owned by Benjamin. Benjamin offered to sell the lot to Aidan for $500,000. Aidan wanted time...
-
P 5-3 Computations (parent buys from one subsidiary and sells to the other) Pam Company owns controlling interests in Sun and Toy Corporations, having acquired an 80 percent interest in Sun in 2016,...
-
3. On the books of Pam Corporation, the investment account is properly reflected on December 31, 2016, at: a $3,240 b $3,264 c $3,276 d Not enough information is given.
-
1. Under the equity method, Pam reports investment income from Sun for 2016 of: a $120 b $96 c $80 d $104 loss
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App