Answered step by step
Verified Expert Solution
Question
1 Approved Answer
llana Industries, Inc., needs a new lathe. It can buy a new high-speed lathe for $1.04 million. The lathe will cost $35,900 to run will
llana Industries, Inc., needs a new lathe. It can buy a new high-speed lathe for $1.04 million. The lathe will cost $35,900 to run will save the firm $133,100 in labour costs, and will be useful for 12 years. Suppose that for tax purposes, the lathe will be in an asset class with a CCA rate of 25%. llana has many other assets in this asset class. The lathe is expected to have a 12-year life with a salvage value of $110,000. The actual market value of the lathe at that time will also be $110,000. The discount rate is 8% and the corporate tax rate is 35% What is the NPV of buying the new lathe? (Round your answer to the nearest cent.) FOR THIS QUESTION ONLY, YOU MAY FORWARD YOUR EXCEL SPREADSHEET OR ANOTHER DOCUMENT THAT SHOWS YOUR WORK (TO MY SLATE EMAIL ADDRESS) SO I CAN REVIEW IT AND AWARD PARTIAL CREDIT. It must be received by no later than 10:35 AM (no exceptions!). NPV S -258609.4
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