Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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): $ B. What are the estimated annual operating cash flows? $ C. What is the terminal cash flow? $ D. What is the NPV for this project
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