Answered step by step
Verified Expert Solution
Question
1 Approved Answer
help!! Excel Online Structured Activity: Replacement Analysis The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The
help!!
Excel Online Structured Activity: Replacement Analysis 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 $4,150 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 $13,000, and has an estimated useful life of 6 years with an estimated salvage value of $1,300. This steamer falis 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 would allow for an output expansion, so sales would rise by $2,000 per year; even so, the new machine's much greater efficiency would reduce operating expenses by $1,500 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 40%, and its WACC is 14%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. \begin{tabular}{|c|c|c|c|c|c|c|} \hline 4. & B & C & D & E & F & G \\ \hline 1 & & 6 & & & . & \\ \hline 2 & & & & & & \\ \hline 3 & & & & & & \\ \hline 4 & $650 & & & & & \\ \hline 5 & $325 & & & & & \\ \hline 6 & $3,575 & ? & & & & \\ \hline 7 & $4,150 & & & & - & \\ \hline 8 & $800 & & & & & \\ \hline 9 & & & & & & \\ \hline 10 & & & & & & \pm \\ \hline 11 & 6 & & & & & \\ \hline 12 & $13,000 & & & 6 & 11 & \\ \hline 13 & $1,300 & & & 1 & 1 & s. \\ \hline 14 & $2,000 & & & & 2 & 3. \\ \hline 15 & $1,500 & & b & & & \\ \hline 16 & $2,900 & & & & & \\ \hline 17 & $700 & & & & & Q \\ \hline 18 & & & & \multicolumn{2}{|c|}{ } & \\ \hline 19 & Year 1 & Year 2 & Year 3 & Year 4 & Year 5 & Year 6 \\ \hline 20 & 20.00% & 32.00% & 19.20% & 11.52% & 11.52% & 5.76% \\ \hline 21 & & & & & & \\ \hline 22 & 40.00% & & & & & \\ \hline 23 & 14.00% & & & & & \\ \hline 24 & & & & & & \\ \hline 25 & & Formulas & & & & \\ \hline 26 & $13,000 & & & a. & & \\ \hline 27 & $4,150 & & & & & \\ \hline 28 & $230= & =(41503575)40% & & & & \\ \hline 29 & $2,200= & =2900+700 & & & & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|c|} \hline A. & B & c & D & E & F & G & H & I \\ \hline 55 & & & & & . & & & \\ \hline 56 & Year 0 & Yoar 1 & Year 2 & Year 3 & Year 4 & Year 5 & Year 6 & Formulas \\ \hline 57 & $11,280 & & & & & & & \\ \hline 58 & & $1,400 & $1,400 & $1,400 & $1,400 & $1,400 & $1,400 & \\ \hline 59 & & so & \$o & so & so & $0 & so & \\ \hline 60 & & ? & & & & & r & \#N/A \\ \hline 61 & & & & & . & & $1,300 & \\ \hline 62 & 8 & & & & & & & /A \\ \hline 63 & & & & & 7 & & r & \#N/A \\ \hline 64 & $11,280 & $1,400 & $1,400 & $1,400 & $1,400 & $1,400 & r & HN/A \\ \hline 65 & & & & - & & & & \\ \hline 66 & & Formulas & & F & & & & . \\ \hline 67 & & #N/A & & 2 & & & & \\ \hline 68 & & NN/A & & & & & & \\ \hline \end{tabular} Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started