Edit View History Bookmarks People Window Help rk #04 X Bb Announcements - 31015.2019( x H s:/ewconnect.mheducation.com/flow/connect.html rk #04 Saved Market Top Investors, Inc., is considering the purchase of a $340,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method, at which time it will be worth $48,000. The computer will replace two office employees whose combined annual salaries are $84,000. The machine will also immediately lower the firm's required net working capital by $73,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 23 percent. The appropriate discount rate is 10 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV Is it worthwhile to buy the computer? O NO O Yes nnect.html Homework #04 Saved 6 A firm is considering an investment in a new machine with a price of $16.5 million to replace its existing machine. The current machine has a book value of $6.2 million and a market value of $4.9 million. The new machine is expected to have a 4-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $6.7 million in operating costs each 10 year over the next four years. Both machines will have no salvage value in four years. If poin the firm purchases the new machine, it will also need an investment of $330,000 in net working capital. The required return on the investment is 12 percent and the tax rate is 23 percent. The company uses straight-line depreciation. eBook Print What is the NPV of the decision to purchase a new machine? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89.) What is the IRR of the decision to purchase a new machine? (Do not round intermediate 32.16.) calculations and enter your answer as a percent rounded to 2 decimal places, e.g., What is the NPV of the decision to purchase the old machine? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and 1,234,567.89.) enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., What is the IRR of the decision to purchase the old machine? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. ) New machine NPV New machine IRR % Old machine NPV Old Machine IRR %dit View History Bookmarks People Window Help #04 X Bb Announcements - 31015.20194 X s:/ewconnect.mheducation.com/flow/connect.html k #04 G Saved A proposed cost-saving device has an installed cost of $745,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $155,000, the marginal tax rate is 25 percent, and the project discount rate is 13 percent. The device has an estimated Year 5 salvage value of $110,000. What level of pretax cost savings do we require for this project to be profitable? MACRS schedule. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Pretax cost savings K We....xIsx A 729 MAR M 31 -(30)
