Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

this is my third time asking this question on here due to wrong answers. i kindly ask that if you are unsure of what you

this is my third time asking this question on here due to wrong answers. i kindly ask that if you are unsure of what you are doing that you refrain from answering. thank you so much! :) image text in transcribed
A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. The new monitor requires us to increase net working capital by $47,200 when we buy it. Assume a tax rate of 40% a. If we requlre a 15% return, what is the NPV of the purchase? (Do not round intermediate calculations, Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ 194703.78 b. Suppose the monitor was assigned a 25% CCA rate. Calculate the new NPV. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ 1513496.27 c. Will the NPV at 25% CCA rate be farger or smaller? Smaller Larger A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. The new monitor requires us to increase net working capital by $47,200 when we buy it. Assume a tax rate of 40% a. If we requlre a 15% return, what is the NPV of the purchase? (Do not round intermediate calculations, Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ 194703.78 b. Suppose the monitor was assigned a 25% CCA rate. Calculate the new NPV. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV $ 1513496.27 c. Will the NPV at 25% CCA rate be farger or smaller? Smaller Larger

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Fundamental Accounting Principles

Authors: John J Wild, Ken Shaw

25th Edition

9781260247985

Students also viewed these Finance questions