Existing Equipment Initial cost $70000five years ago Deprectiation 10 years Salvage value $10000 Current market value $20000 Annual labor expense $50000 Annual net working capital
| Existing Equipment |
| Initial cost $70000five years ago |
| Deprectiation 10 years |
| Salvage value $10000
|
| Current market value $20000 |
| Annual labor expense $50000 |
| Annual net working capital increase $300 beginning in year 1 |
| Cost of capital 5% |
| New Equipment |
| Cost $100000 |
| Life expectancy 5 years |
| salvage value $20000 |
| annual labor expense $15000 |
| Annual net working capital increase $1000
|
| Cost of Capital 5% |
Use the given financial information to answer the following question: Which type of analysis should be used to determine whether to pruchase new equipment? Please explain in detail. 1) dupont analysis 2) comparative analysis, 3) variance analysis 4) ratio analysis. Please explain in detail. Thank you!
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Authors: Frederi G. Viens, Maria Cristina Mariani, Ionut Florescu
1st Edition
