Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Roboties Corporation is considering, replacing existing hoist with a new hoist N. $32,000, and it has 2 years left of The existing horst is 3

image text in transcribed
image text in transcribed
image text in transcribed
Roboties Corporation is considering, replacing existing hoist with a new hoist N. $32,000, and it has 2 years left of The existing horst is 3 years old, cost operations. It is depriciated undeya straight-line depriciation method over 5 years recovery period. Hoist N easts $ 54,000 to purchase and $6000 to installa It has 2 years wsable life and will be depriciated under a straight-line depriciation method using 2 years recovery period Suppose the purchase of hoist N would result in a $6000 increase in not working capital. The projected profits before deprietation and taxes with horst Nay in table 1 the existing hoist are given The 2 hoist can currently be sold sold for $20,000 and will not meur any removal of other costs. At the end of e years, the existing hoist can be sold can be sold at $44,000 before taxes at the end of the 2-year period. The firm is subject to a 40% tax rate on both ordinary income and capital to gain. The company can raise fund to finance the initial investments The company's current bond is treaded at price B 800. It has a face value = 1000 and coupon reate @= 10%. The bond's maturaty is 5years. The company's current stoet is treaded at a price P=100 It's expeeted dividends D = 10 and whether the company should replace are a constant rate at a expected to groaluate 16.47 present value method, the change in terminal Bosh flow, the weighted average cost of capital, and use all that to compute the NPV and make a decision. Keep one decimal place in the WACC calculations Year Hoist N Existing Hoist 22,000 14,000 2 24,000 14,000 cash flow, 1 Roboties Corporation is considering, replacing existing hoist with a new hoist N. $32,000, and it has 2 years left of The existing horst is 3 years old, cost operations. It is depriciated undeya straight-line depriciation method over 5 years recovery period. Hoist N easts $ 54,000 to purchase and $6000 to installa It has 2 years wsable life and will be depriciated under a straight-line depriciation method using 2 years recovery period Suppose the purchase of hoist N would result in a $6000 increase in not working capital. The projected profits before deprietation and taxes with horst Nay in table 1 the existing hoist are given The 2 hoist can currently be sold sold for $20,000 and will not meur any removal of other costs. At the end of e years, the existing hoist can be sold can be sold at $44,000 before taxes at the end of the 2-year period. The firm is subject to a 40% tax rate on both ordinary income and capital to gain. The company can raise fund to finance the initial investments The company's current bond is treaded at price B 800. It has a face value = 1000 and coupon reate @= 10%. The bond's maturaty is 5years. The company's current stoet is treaded at a price P=100 It's expeeted dividends D = 10 and whether the company should replace are a constant rate at a expected to groaluate 16.47 present value method, the change in terminal Bosh flow, the weighted average cost of capital, and use all that to compute the NPV and make a decision. Keep one decimal place in the WACC calculations Year Hoist N Existing Hoist 22,000 14,000 2 24,000 14,000 cash flow, 1

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Finance questions