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Replcement Project: KFUPM is planning to replace it heavy duty printing machine with a newer model that is faster and better quality. The existing machine
Replcement Project:
KFUPM is planning to replace it heavy duty printing machine with a newer model that is faster and better quality. The existing machine has a life of years and years of them has passed. Now KFUPM is evaluating replacing this machine with the newer model which has a life of years. KFUPM hired you to analyze the proposed replacement and you collected the below information.
New Machine:
Life of machine: years
The cost of the new machine is SAR comma
The machine will increase the gross profit every year by SAR
The market value of the machine when sold at the end of its life is SAR
If replaced, then the net working capitalNOWC will increase every year by SAR
KFUPM will recover all investments in working capital at the end of the new machine's lifeafter years
Old Machine:
Life of machine is years. years has past. Effective remaining life of the machine is years.
Orginal cost of the existing machine is SAR
Total depreciation of the past years is SAR
If KFUPM decided to go with the replacement proposal, then the existing machine can be sold right now at SAR
The market value of the machine when sold at the end of its life is zero years from today
WACC is
Tax rate is
Both machines use straightline Depreciation.
Calculate the follwoing:
Question content area bottom
Part
Notes:
Use Decimals
It is advisable to solve the question using Excel or on paper, and then put your relevant answers here:
Depreciable base SAR is
A New Machine:
Year
Year
Year
Year
NOPAT Dep.
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