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* * * Solve the Excel Table using Excel Formulas * * * NO HARD CODED NUMBERS ( Cash - flow analysis, replacing a machine
Solve the Excel Table using Excel Formulas
NO HARD CODED NUMBERS
Cashflow analysis, replacing a machine The Easy Sight Company manufactures sunglasses. The company has two machines, each of which produces sunglasses per month. The book value of each of the old machines is $ and their expected life span is years from today. The machines are being depreciated on a straightline basis to zero salvage value over their remaining lifetime. The company assumes it will be able to sell a machine today for $ The price of a new machine is $ and its expected life span is years. The new machine will save the company $ for every pair of sunglasses produced.
Demand for sunglasses is seasonal. During the months of the summer MaySeptember demand is sunglasses per month, while during the winter months, it falls down to per month.
Assuming that due to insurance and storage costs it is uneconomical to store sunglasses at the factory. Should Easy Sight replace its two old machines with new ones if its discount rate is and its corporate tax rate is Assume that the current date is January Depreciation and all other cash flows are taken at the end of December of each year.
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