The Dauten Toy Corporation currently uses an injection molding machine that was purchased prior to the new tax legislation. This machine is being depreciated on a straight-line basis, and it has 6 years of remaining life. Its current book value is $2,400, and it can be sold for $2,500 at this time. Thus, the annual depreciation expense is $2,400\/6 = $400 per year. If the old machine is not replaced, it can be sold for $500 at the end of its useful life.<\/p>
Dauten is offered a replacement machine which has a cost of $8,000, an estimated useful life of 6 years, and an estimated salvage value of $800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase. The replacement machine would permit an output expansion, so sales would rise by $800 per year; even so, the new machine's much greater efficiency would cause operating expenses to decline by $1,000 per year. The new machine would require that inventories be increased by $2,500, but accounts payable would simultaneously increase by $800. Dauten's marginal federal-plus-state tax rate is 25%, and its WACC is 11%.<\/p>
What is the NPV of the incremental cash flow stream? Negative value, if any, should be indicated by a minus sign. Round your answer to the nearest cent. $<\/p>", "transcribed_text": "", "related_book": { "title": "Financial and Managerial Accounting the basis for business decisions", "isbn": "125969240X, 978-1259692406", "edition": "18th edition", "authors": "Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/1245.jpg", "uri": "\/textbooks\/financial-and-managerial-accounting-the-basis-for-business-decisions-18th-edition-1245", "see_more_uri": "" }, "free_related_book": { "isbn": "1521182973", "uri": "\/textbooks\/the-7-page-business-plan-your-guide-to-planning-starting-and-running-your-business-1st-edition-978-1521182970-270755", "name": "The 7 Page Business Plan Your Guide To Planning Starting And Running Your Business", "edition": "1st Edition" }, "question_posted": "2024-06-05 12:07:23", "see_more_questions_link": "\/study-help\/questions\/business-accounting-2024-September-20", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/what-is-meant-by-a-linker", "description": "What is meant by a linker?", "stars": 3 }, { "url": "\/study-help\/financial-accounting\/sunshine-solar-inc-had-sales-revenue-of-445000-cost-of-807638", "description": "Sunshine Solar, Inc., had sales revenue of $445,000, cost of goods sold of $193,000, and net income of $96,000 for the year. An average of 4,000 shares of common stock were outstanding during the...", "stars": 3 }, { "url": "\/study-help\/biostatistics\/determine-the-sample-size-required-for-a-large-sample-95-1981052", "description": "Determine the sample size required for a large sample 95% confidence interval for a population proportion when (a) ???? = 0.35 and the desired margin of error is ???????? = 0.04. (b) ???? = 0.75 and...", "stars": 3 }, { "url": "\/the-bank-portion-of-the-bank-reconciliation-for-the-fixar", "description": "The bank portion of the bank reconciliation for the FIXAR Company at January 31, 2010 is as follows: The adjusted cash balance per bank agreed with the cash balance per books at January 31st. The...", "stars": 3 }, { "url": "\/study-help\/questions\/program-evaluation-is-defined-as-the-systematic-assessment-of-the-9834874", "description": "Program evaluation is defined as the systematic assessment of the operation and \/ or outcomes of a program, compared to a set of standards, in order to improve the program. True False", "stars": 3 }, { "url": "\/study-help\/economics\/1-what-has-happened-to-the-price-elasticity-of-demand", "description": "1. What has happened to the price elasticity of demand for Indian restaurant curries over time? What can be said about cross -price elasticity of demand for pub meals? 2. Collusion between...", "stars": 3 }, { "url": "\/study-help\/questions\/in-c-with-visual-studio-generate-the-vertices-of-the-9520224", "description": "In c++ with visual studio Generate the vertices of the sides of a triangle and verify if the sides form a triangle, then if it is a triangle isosceles, scalene or equilateral; in each case resolve:...", "stars": 3 }, { "url": "\/study-help\/questions\/the-techaide-company-produces-and-sells-7000-modular-computer-desks-1001946", "description": "The TechAide Company produces and sells 7,000 modular computer desks per year at a selling price of $750 each. Its current production equipment, purchased for $1,050,000 and with a 5-year useful...", "stars": 3 }, { "url": "\/study-help\/questions\/eight-out-of-64-workstations-in-an-office-are-going-3611542", "description": "Eight out of 64 workstations in an office are going to be replaced. The cost of replacing all 64 workstations would be $10,200. Additionally, four workstations will receive a computer upgrade. The...", "stars": 3 }, { "url": "\/study-help\/questions\/the-need-for-ongoing-change-within-the-us-healthcare-system-1008871", "description": "The need for ongoing change within the US healthcare system is warranted. However, before implementing change, advanced notice is given and explicit instructions on how the change will happen should...", "stars": 3 }, { "url": "\/study-help\/questions\/people-who-want-to-raise-kids-should-have-to-get-1008801", "description": "People who want to raise kids should have to get a parenting license first. Parenting is a lot like piloting an airplane. In both cases, people's lives are in your hands: you could seriously injure...", "stars": 3 }, { "url": "\/study-help\/questions\/from-a-collection-of-7-different-numbers-and-8-different-1004181", "description": "From a collection of 7 different numbers and 8 different letters, 7- place license plates can be designed in such a way that the first 4 places are numbers and the next 3 places are letters....", "stars": 3 }, { "url": "\/study-help\/questions\/figge-and-mathews-plc-a-consulting-firm-uses-an-activitybased-7102236", "description": "Figge and Mathews PLC, a consulting firm, uses an activity-based costing in which there are three activity cost pools. The company has provided the following data concerning its costs and its...", "stars": 3 }, { "url": "\/study-help\/frank-woods-business-accounting\/a-mtoto-ltd-operate-as-wholesale-cash-and-carry-stores-1552140", "description": "A Mtoto Ltd operate as wholesale 'cash and carry' stores and in addition to its main store have two other depots. The company's summarised statement of financial position as at 31 August 2014 was as...", "stars": 3 }, { "url": "\/study-help\/frank-woods-business-accounting\/david-llewelyn-has-been-advised-by-his-bank-manager-that-1552139", "description": "David Llewelyn has been advised by his bank manager that he ought to provide a forecast of his cash position at the end of each month. This is to ensure that his cash inputs will be sufficient to...", "stars": 3 }, { "url": "\/study-help\/frank-woods-business-accounting\/a-lan-spiro-formerly-a-taxidriver-decided-to-establish-a-1552137", "description": "A lan Spiro, formerly a taxi-driver, decided to establish a car-hire business after inheriting $ 50,000$. His business year would be divided into budget periods each being four weeks. He commenced...", "stars": 3 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/cash-inflows-and-outflows-for-each-year-net-present-value-2290103", "next": "\/study-help\/questions\/-2290105" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Finance", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-finance" }, { "name": "The Dauten Toy Corporation currently uses an injection molding machine that was", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/the-dauten-toy-corporation-currently-uses-an-injection-molding-machine-2290104" } ], "skill_details": { "skill_id": "13", "skill_name": "Finance", "parent_id": "1" } } } }