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what am i doing wrong and how do i do sensitivity analysis Replacement of a Printing Machine GWACO M Tax VE 3900 Orge of old
what am i doing wrong and how do i do sensitivity analysis
Replacement of a Printing Machine GWACO M Tax VE 3900 Orge of old gold And on Pudpow Estrene Estado Edvina 2000 2. COL U 1 wyr Porn sit 31 DOGC 3000 S100 10 Y cation www 12. 193 19 15 15 Puchat price 11 set of Tonga 5 COOGE DOCE 2000 2700 2600 2000 3000 31 3200 BIRI MILLS DOCE 1990 2 Dersleting calows 22 treepory 22 Opreciation 24 One 25 28 DOGC LE TSO 2000 2010 275 25 ml Noutati RE De 1225 Od NA TO) 1 buc set W op 2. ABC Inc. is considering the replacement of an old printing machine with a new one that will increase revenue by $3,000 per year (A revenue = $3,000/year). The new machine costs $15.000, has an estimated life of 6 years, and can be depreciated straight line to a zero salvage value over the next 6-year period. The new machine is expected to have a disposal value of $3,000 at the end of its estimated life. The old machine was bought 4 years ago at $5,000 and is being depreciated under the straight-line method to a zero salvage value (original life = 10 years). The old machine, however, is not likely to have any disposal value at the end of its useful life (6 years from now) but has a current market value of $2,000. The applicable corporate tax rate is 25%, and the firm's WACC is 10%. a) Should the new machine replace the old one? Assume that the old machine can be used for another six years if not replaced. b) Create a two-way data table showing the sensitivity of NPV with respect to the change in annual revenue generated by the new machine, and the expected disposal value of the new machine (at the end of its 6-year expected life). Use a $2,500 to $3,500 range for both the change in annual revenue and the disposal value of the new machine (with a $100 increment). Replacement of a Printing Machine GWACO M Tax VE 3900 Orge of old gold And on Pudpow Estrene Estado Edvina 2000 2. COL U 1 wyr Porn sit 31 DOGC 3000 S100 10 Y cation www 12. 193 19 15 15 Puchat price 11 set of Tonga 5 COOGE DOCE 2000 2700 2600 2000 3000 31 3200 BIRI MILLS DOCE 1990 2 Dersleting calows 22 treepory 22 Opreciation 24 One 25 28 DOGC LE TSO 2000 2010 275 25 ml Noutati RE De 1225 Od NA TO) 1 buc set W op 2. ABC Inc. is considering the replacement of an old printing machine with a new one that will increase revenue by $3,000 per year (A revenue = $3,000/year). The new machine costs $15.000, has an estimated life of 6 years, and can be depreciated straight line to a zero salvage value over the next 6-year period. The new machine is expected to have a disposal value of $3,000 at the end of its estimated life. The old machine was bought 4 years ago at $5,000 and is being depreciated under the straight-line method to a zero salvage value (original life = 10 years). The old machine, however, is not likely to have any disposal value at the end of its useful life (6 years from now) but has a current market value of $2,000. The applicable corporate tax rate is 25%, and the firm's WACC is 10%. a) Should the new machine replace the old one? Assume that the old machine can be used for another six years if not replaced. b) Create a two-way data table showing the sensitivity of NPV with respect to the change in annual revenue generated by the new machine, and the expected disposal value of the new machine (at the end of its 6-year expected life). Use a $2,500 to $3,500 range for both the change in annual revenue and the disposal value of the new machine (with a $100 increment) Step by Step Solution
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