Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please use execl and show work ue poject Problem 2: Consider a factory that produces light bulbs. The factory has an old piece of equipment,

image text in transcribed
image text in transcribed
please use execl and show work
ue poject Problem 2: Consider a factory that produces light bulbs. The factory has an old piece of equipment, and the factory owner is considering replacing the old equipment with a new machine. The owner is considering two options, with the following details: Cost to purchase the machine Variable cost per light bulb Fixed cost per year Life span (years) Number of light bulbs factory will sell per year Machine A $50,000.00 $0.18 $100,000.00 Machine B $20,000.00 $0 26 $25,000.00 10 500,000 10 600,000 The factory sells each light bulb for $0.40, the discount rate is 12%, and the corporate tax rate is 25%. The purchase of the machine occurs at year and subsequent cash flows occur from years I through 10. Assume straight-line depreciation to zero for both machines. Assume no investment in net working capital. There is no salvage value. The factory needs only one new machine. Which machine should the factory owner buy? Additionally, construct a two-way data table to show how the decision variable (NPV) changes for different discount rates and different tax rates. Do this analysis only for the preferred machine X Cut 11 AA EE Paste Copy 2 Wrap Tea O A TE General % Merge Center 91 Conditional formats can Formatting Table Styles Numbers X f Discount rate D E F G H I Discount rate 2 Corporate tax rate 25% 4 Price of light bulbs S0.40 7 Cost to purchase the machine 8 Variable cost per light bulb 9 Fixed cost per year 10 Life span (years) 11 Number of light bulbs factory will sell per year Machine A Machine B $50,000.00 $20,000.00 $0.18 $0.26 $100,000.00 $25,000.00 600,000 500,000 Problem 1 Problem 2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

Determine miller indices of plane X z 2/3 90% a/3

Answered: 1 week ago