Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please show work and functions/equations in excel The Darlington Equipment Company purchased a machine 5 years ago at a cost of $100,000. The machine had
please show work and functions/equations in excel
The Darlington Equipment Company purchased a machine 5 years ago at a cost of $100,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated by the straight-line method by $10,000 per year. If the machine is not replaced, it can be sold for $10,000 at the end of its useful life. A new machine can be purchased for $180,000, including Installation costs. During its 5-year life, it will reduce cash operating expenses by $60,000 per year. Sales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. The new machine is eligible for 100% bonus depreciation at the time of purchase. The old machine can be sold today for $55,000. The firm's tax rate is 25%. The appropriate WACC is 9%. a. If the new machine is purchased, what is the amount of the initial cash flow at Year 0 after bonus depreciation is considered? Cash outflow should be indicated by a minus sign. Round your answer to the nearest dollar. $ b. What are the incremental cash flows that will occur at the end of Years 1 through 5? Round your answers to the nearest dollar Year 1 Year 2 Year 3 $ Year 4 Year 5 c. What is the NPV of this project? Do not round intermediate calculations. Round your answer to the nearest cent. $ Should Darlington replace the old machine? -Select 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