Solve the following problem in MS Excel. 1 Bo Humphries, chief finarcial afficer of Cark Upholstery ComoaTy, XDecta the finn's cet cperating proft after tases for the next5 years to be shown in the folowing table Year Net coeratirg profa ater taves 2 $120,000 4 $250,000 5 $350.000 S100 000 $200,000 Bo s beginning to develop the relevam cash flows neaded to analyze whether to renew or replace Clark's ony depretiable asset, a machine that orenaly cot 330,000, has a current book value of rero, and can now be sold for 520,000 Nete: Becauie the firme's gnly depreciable asset is fully dlepreciated-2s book vale la seor -Its espected operating cas indows equal its rat operating prof after taves) Fe estimates that an the end of 5 years, the existing machine can be sold to net 320cal before taxes. Do plans to uue the felloeing infarmation to develop the releaant cash lows far each of the atamative Altemative 1 Renew the existing machne at a total depracable cost of $90,000 The renewed machine woule have a 5-year usabie life and would be depreciated under MACKS uning a 5 yuar recovery period. Renewirg the machise woud result in the fo lowing prajected revenues and expenses (exdudng depreciation and interest 2 51.175.000 84,200 Year 1 $1,000,000 03,500 LJ00,000 $1A25000 S1550,000 918 100 Revetue Expentes (Ecd depreciation 943.100 968.100 and interes The renewed machine would resuh in an increased investment in net warking capital of $15.000 Ar the end uf the 5 years, the machine could be said to net S8,000 befare tases Alternative 2 Repiace the exitting machire with a new machine that costs $100,000 and reau res installation casts of 510 000 The new machine would have a 5-vear uaalsie ife and would be depraciated under ACKS ing a 5year recovery perad The fimls prajectad revertues and eepenses (euding depreciation and interest acouires the mathine, wauid be as foiows Tear Revenue Eaperses (Ead depredation and interest $1,000,000 $1,175,000 764 500 S1.300 000 $1.425.000 S89.900 $1.550,000 398.900 39 a00 914.500 There wil be an increased imestment in net warking cagital of 512.c0C and the machine wil be sald for 525.000 tthe end of 5 years Asune a tax rate of as Caloudale the initial investment associated with each of Clark LUpholstery's abematives a. Caloulate the intial ivestment assciated with Abermatie 1 belew Rand n the neae dell) lal lavesiment Alteraaiive 1 Intalled cen af the renewed machine Cot of asset allation costs Tal cat of rmewed machine Aler-tas groceeds m ale of d ase Prds Eom sale sf ld a Teale of d et Ted wowanh wie af d t Chge wking pl e Solve the following problem in MS Excel. 1 Bo Humphries, chief finarcial afficer of Cark Upholstery ComoaTy, XDecta the finn's cet cperating proft after tases for the next5 years to be shown in the folowing table Year Net coeratirg profa ater taves 2 $120,000 4 $250,000 5 $350.000 S100 000 $200,000 Bo s beginning to develop the relevam cash flows neaded to analyze whether to renew or replace Clark's ony depretiable asset, a machine that orenaly cot 330,000, has a current book value of rero, and can now be sold for 520,000 Nete: Becauie the firme's gnly depreciable asset is fully dlepreciated-2s book vale la seor -Its espected operating cas indows equal its rat operating prof after taves) Fe estimates that an the end of 5 years, the existing machine can be sold to net 320cal before taxes. Do plans to uue the felloeing infarmation to develop the releaant cash lows far each of the atamative Altemative 1 Renew the existing machne at a total depracable cost of $90,000 The renewed machine woule have a 5-year usabie life and would be depreciated under MACKS uning a 5 yuar recovery period. Renewirg the machise woud result in the fo lowing prajected revenues and expenses (exdudng depreciation and interest 2 51.175.000 84,200 Year 1 $1,000,000 03,500 LJ00,000 $1A25000 S1550,000 918 100 Revetue Expentes (Ecd depreciation 943.100 968.100 and interes The renewed machine would resuh in an increased investment in net warking capital of $15.000 Ar the end uf the 5 years, the machine could be said to net S8,000 befare tases Alternative 2 Repiace the exitting machire with a new machine that costs $100,000 and reau res installation casts of 510 000 The new machine would have a 5-vear uaalsie ife and would be depraciated under ACKS ing a 5year recovery perad The fimls prajectad revertues and eepenses (euding depreciation and interest acouires the mathine, wauid be as foiows Tear Revenue Eaperses (Ead depredation and interest $1,000,000 $1,175,000 764 500 S1.300 000 $1.425.000 S89.900 $1.550,000 398.900 39 a00 914.500 There wil be an increased imestment in net warking cagital of 512.c0C and the machine wil be sald for 525.000 tthe end of 5 years Asune a tax rate of as Caloudale the initial investment associated with each of Clark LUpholstery's abematives a. Caloulate the intial ivestment assciated with Abermatie 1 belew Rand n the neae dell) lal lavesiment Alteraaiive 1 Intalled cen af the renewed machine Cot of asset allation costs Tal cat of rmewed machine Aler-tas groceeds m ale of d ase Prds Eom sale sf ld a Teale of d et Ted wowanh wie af d t Chge wking pl e
