QUESTION 10 A company is considering replacing one of the old machines used in the manufacturing process. The machine was purchased 2 years ago for $600,000 This machine s being depreciated on a straight-line basis, and it has 4 years of remaining life. When this machine was purchased 2 years ago, it was assumed to have zero salkage value at the end of its useful life of 6 years currently, ths machine has a market value of SS00The company intends to keep this old schne anon-the replacement happens. The current revenue generated by this machine is $250,000 annually and the cost of operating the machine is $175,000 annuaily The replacement machine will cost of $850,000 and $50,000 for shipping and transpotation to the company's location. The new machine falils into 3 year MACRS(03 45% 15% and 7%) The replacement machine would permit an output expansion, so sales n become Sd efficiency would cause operating expenses to become $95,000 per year. The new machine would require inventories be incre would simultaneously increase by $10,000. The replacement project life is 4 years. The new machine can be ased by $65,000 but accounts payable old etax rate is 40%, and its cost ofcagdal is 12% Should the sold at the end of the project's lide for $50 000 while the machine will not have any value at the end of the th year. The company's marginal federal plus-state tax rate is 403%., and as cost company replace the old machine? What is cash flow CF1 to be used in NPV calculations? 246.300 256,400 278.600 232,800 312.400 QUESTION 11 for 2 years Process B wll cost $11,500 and wil produce cash ows of $4,000 per year for 4 years The company can extend each of the tiwo aernatives as neede The cash inflows occur at the end of each year, and this company's cost of capital is 9 percent A company is considerning two average-risk alternative ways of producing a product Process A has a cost of $8, 500 and will produce net cash fows of 55,000 per year The company will use the replacement chain approach to evaluate the project, the NPV of the better project? QUESTION 10 A company is considering replacing one of the old machines used in the manufacturing process. The machine was purchased 2 years ago for $600,000 This machine s being depreciated on a straight-line basis, and it has 4 years of remaining life. When this machine was purchased 2 years ago, it was assumed to have zero salkage value at the end of its useful life of 6 years currently, ths machine has a market value of SS00The company intends to keep this old schne anon-the replacement happens. The current revenue generated by this machine is $250,000 annually and the cost of operating the machine is $175,000 annuaily The replacement machine will cost of $850,000 and $50,000 for shipping and transpotation to the company's location. The new machine falils into 3 year MACRS(03 45% 15% and 7%) The replacement machine would permit an output expansion, so sales n become Sd efficiency would cause operating expenses to become $95,000 per year. The new machine would require inventories be incre would simultaneously increase by $10,000. The replacement project life is 4 years. The new machine can be ased by $65,000 but accounts payable old etax rate is 40%, and its cost ofcagdal is 12% Should the sold at the end of the project's lide for $50 000 while the machine will not have any value at the end of the th year. The company's marginal federal plus-state tax rate is 403%., and as cost company replace the old machine? What is cash flow CF1 to be used in NPV calculations? 246.300 256,400 278.600 232,800 312.400 QUESTION 11 for 2 years Process B wll cost $11,500 and wil produce cash ows of $4,000 per year for 4 years The company can extend each of the tiwo aernatives as neede The cash inflows occur at the end of each year, and this company's cost of capital is 9 percent A company is considerning two average-risk alternative ways of producing a product Process A has a cost of $8, 500 and will produce net cash fows of 55,000 per year The company will use the replacement chain approach to evaluate the project, the NPV of the better project