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Hello, please see the attached assignment that I would like to double check my answers on. Thank you. Use the following information to answer the
Hello, please see the attached assignment that I would like to double check my answers on. Thank you.
Use the following information to answer the questions in this quiz. INFORMATION OLD MACHINE: Original Purchase Price $ 550,000.00 Original Life 10 YEARS Remaining Life 5 YEARS Straight line depreciation in use Salvage Value $ 50,000.00 Current Fair Market Value $ 260,000.00 INFORMATION NEW MACHINE A: Purchase Price Estimated Life $895,000.00 5 YEARS Use Straight Line Depreciation Method Estimated Salvage Value $ 10,000.00 Estimated Net Operating Cash Flow Increase/Decrease (Prior to Depreciation and Taxes) End of Year 1 $ 100,000.00 End of Year 2 $ 150,000.00 End of Year 3 $ 250,000.00 End of Year 4 $ 200,000.00 End of Year 5 $ 200,000.00 ASSUMPTIONS: Tax Rate 40% WACC Rate 7% If you keep the old machine, the NPV is: A. 118,567 B. 117,653 C. 30,489 D. 300,410 QUESTION 2 1. If you sell the old machine and buy new machine A, the NPV will be: 10,619 -4,995 -5,859 2,907 QUESTION 3 1. What decision do you suggest? A Keep the old machine and do not buy the new machine. . B. Sell the old machine and buy the new machine. QUESTION 4 1. List 3 risk factors that could change your answers aboveStep by Step Solution
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