Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You work in a manufacturing company. You have the possibility to change your production unit. This production unit was bought 2 years ago for 1000000$,
You work in a manufacturing company. You have the possibility to change your production unit. This production unit was bought 2 years ago for 1000000$, useful life 10 years, depreciated following the straight line method with a salvage value of 0 . Today this machine can be sold for 420000$. The new production unit cost 1500000$, with a useful life of 5 years, depreciated following the straight line method with a salvage value of 300000$ at the end of its useful life. This machine will increase your working capital by 10000$. This machine is more efficient and will allow you to reduce your fixed cost by : - Labour cost : 8000$/ month - Energy cost : 75000$ /quarter Tax rate is 30% and will be 15% at the beginning of year 3 . You want a rate of return of 16%. Do you invest and why ? give several KPI to analyse the situation
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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