Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of If kept,
The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of If kept, the steamer will have depreciation expenses of $600 for 5 years and $300 for the sixth year. Its current book value is $3,300, and it can be sold on Internet auction site for $3,950 at this time. If the old steamer is not replaced, it can be sold for $800 at the end of estimated salvage value of $1,200. This steamer falls into the MACRS 5 -years class, so the applicable depreciation rates 20.00%, 32.00%, by $2,900, but accounts payable would simultaneously increase by $700. Gilbert's marginal federal-plus-state tax rate is 25%, and the project cost 13% What is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar. $ Should it replace the old steamer? The old steamer be replaces
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started