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Metlock Corp. is planning to replace an old asset with new equipment that will operate more efficiently. The following amounts may be relevant to
Metlock Corp. is planning to replace an old asset with new equipment that will operate more efficiently. The following amounts may be relevant to this analysis. Cost of old asset $13,200 Book value of old asset $1,900 Selling price of old asset $1,900 Purchase price of new replacement asset $19,800 Estimated salvage value of new asset $1,800 Estimated useful life of new asset 5 years Estimated annual net operating cash inflows $3,000 year for 5 years Discount rate Tax rate 10% 20% Determine which amounts listed are relevant cash flows for Metlock Corp. as it considers this asset sale and replacement. Cost of old asset Book value of old asset Selling price of old asset Purchase price of new replacement asset Estimated salvage value of new asset Estimated annual net operating cash inflows Then, find the NPV of the new investment. (Round present value factor calculations to 5 decimal places, eg 1.25124 and final answer to 2 decimal places ea. 5,125.36. Enter negative amounts using either a negative sign preceding the number, ex-5,125.36 or parentheses, es (5.125.36) Click here to view the factor table NPV
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