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Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $60,781.00 seven years ago. The old equipment currently has
Your corporation is considering replacing older equipment. The old machine is fully depreciated and cost $60,781.00 seven years ago. The old equipment currently has no market value. The new equipment cost $79,228.00. The new equipment will be depreciated to zero using straight-line depreciation for the four-year life of the project. At the end of the project the equipment is expected to have a salvage value of $35,474.00. The new equipment is expected to save the firm $28,653.00 annually by increasing efficiency and cost savings. The corporation has tax rate of 31.28% and a required return on capital of 11.61%. Please enter your answers with two decimal places, as these are dollar amounts. A. What is the total initial cash outflow? (Show as a negative number): $ -79,228.00 B. What are the estimated annual operating cash flows? $ 19626.75 C. What is the terminal cash flow? $ 24316.76 D. What is the NPV for this project? $ 3939.38
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