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This is all the information given. There is no discount rate, the new depriciation rates are the MACRS. Principles of Finance (FIN 3213) Comprehensive Capital
This is all the information given. There is no discount rate, the new depriciation rates are the MACRS.
Principles of Finance (FIN 3213) Comprehensive Capital Budgeting Problenm Homework 8 and 9, 20 points due Tuesday, November 14, 2017 bracket, The Bellich Company, a manufacturer of electronic components is considering the purchase of a new, fully-automated machine to replace an older, operated one. The machine being replaced, now five years old, origi 10 years. It was being depreciated using the simplified straight-line method from to zero, thus generatin $5,000. The old machine re $3,000 per year in fringe benefits. The annual costs of maintenance and defects associated w the old machine were S6,000 and $3,500, respectively. The replacement machine under consideration has a purchase price of $95,000 and would be depreciated using the MA method using a 5-year recovery period. It is anticipated that the new machine could be sold after five years for $12,000. To get the automated machine in running order, there would be a $3,000 shipping fee and a $2,000 installation charge. In addition, because the new machine would work faster than the old one, revenues are expected to increase by $2500 per year and investment in raw materials and goods-in-process inventories would need to be increased by a total of $8,000. The annual costs of maintenance and defects on the new machine would be S1,500 and $4,000, respectively in the 40% marginal tax manually- nally had an expected life of $25,000 down g $2,500 in depreciation per year. The old machine could be sold today for quired one operator who earned $25,000 per year in salary and CRS MACRS Class of Investment 5-year 20% 32 19 12 ownership year 3-year 33% 45 15 7year 14% 25 17 13 10-year 10% 18 14 12 2 10 Principles of Finance (FIN 3213) Comprehensive Capital Budgeting Problenm Homework 8 and 9, 20 points due Tuesday, November 14, 2017 bracket, The Bellich Company, a manufacturer of electronic components is considering the purchase of a new, fully-automated machine to replace an older, operated one. The machine being replaced, now five years old, origi 10 years. It was being depreciated using the simplified straight-line method from to zero, thus generatin $5,000. The old machine re $3,000 per year in fringe benefits. The annual costs of maintenance and defects associated w the old machine were S6,000 and $3,500, respectively. The replacement machine under consideration has a purchase price of $95,000 and would be depreciated using the MA method using a 5-year recovery period. It is anticipated that the new machine could be sold after five years for $12,000. To get the automated machine in running order, there would be a $3,000 shipping fee and a $2,000 installation charge. In addition, because the new machine would work faster than the old one, revenues are expected to increase by $2500 per year and investment in raw materials and goods-in-process inventories would need to be increased by a total of $8,000. The annual costs of maintenance and defects on the new machine would be S1,500 and $4,000, respectively in the 40% marginal tax manually- nally had an expected life of $25,000 down g $2,500 in depreciation per year. The old machine could be sold today for quired one operator who earned $25,000 per year in salary and CRS MACRS Class of Investment 5-year 20% 32 19 12 ownership year 3-year 33% 45 15 7year 14% 25 17 13 10-year 10% 18 14 12 2 10Step by Step Solution
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