Question
Your company is considering the replacing an old machine with a more efficient model. The new machine costs $39,500, will last for 7 years and
Your company is considering the replacing an old machine with a more efficient model. The new machine costs $39,500, will last for 7 years and save $12,900 per year in expenses. The discount rate is 18% and the tax rate is 26%. The machine will be depreciated on a straight line basis to zero. The old machine is fully depreciated and can be sold today for $2,700.
| A) what is the amount of initial investment required? | |
| B) what is the after-tax gain on the sale of the old machine? The old machine is fully depreciated. | |
| C) what is the amount of operating cash flow (OCF) per year? | |
| D) what is the NPV of the project? |
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Financial Management Of Health Care Organizations
Authors: William N. Zelman, Michael J. McCue, Alan R. Millikan, Noah D. Glick
2nd Edition
063123098X, 9780631230984
