Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The President of a small construction firm is feeling nervous. A new machine has just been released by their supplier which makes the one purchased

image text in transcribed
image text in transcribed
The President of a small construction firm is feeling nervous. A new machine has just been released by their supplier which makes the one purchased by the firm a year ago obsolete. As a result, the market value for the costing machine has fallen from $400.000 a year ago to $35,000 today. In 10 years time, it will only be worth $5,000. The replacement machine costs $700,000 and it would increase operating revenues by $65,000 a year. The new equipment has a 10 year life and an expected salvage value of $115,000. The firm's tax rate is 394, the CCA rate is 25% and the firm needs a 14% rate of return on their investment what is the NPV? a Round your answer to the nearest dollar, no dollar sign, no commas, put negative sign it needed The President of a small construction form is feeling nervous. A new machine has just been released by their supplier which makes the one purchased by the firm a year ago obsolete. As a result the market value for the existing machine has fallen from $400,000 a year ago to $35,000 today. In 10 years time, it will only be worth $5,000. The replacement machine costs $700,000 and it would increase operating revenues by $65,000 a year. The new equipment has a 10 year life and an expected salvage value of $115,000. The firm's tax rate is 39%, the CCA rate is 259 and the firm needs a 14% rate of return on their investment what is the NPV? Round your answer to the nearest dollar, no dollar sign, no commas, put negative sign if needed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

More Books

Students also viewed these Finance questions

Question

What are seconds? LO.1

Answered: 1 week ago