Question

"A manufacturing company has just received an order with the following financial data. All dollar values...

"A manufacturing company has just received an order with the following financial data. All dollar values are given in constant dollars, and inflation will impact the annual revenue, annual operating cost, and the salvage value. The two-year project requires immediately purchasing equipment for $59,000. The equipment falls into the MACRS 5-year class. The machine will be sold for $19,000 at the end of two years. The project will bring in additional annual revenue of $99,000, but it is expected to incur an additional annual operating cost of $37,000. The firm expects a general inflation rate of 5% per year during the project period. The firm's tax rate is 43%, and its market interest rate is 15%. What is the net present worth of this project?"

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
"A manufacturing company has just received an order with the following financial data. All dollar values...
"A manufacturing company has just received an order with the following financial data. All dollar values are given in constant dollars, and inflation will impact the annual revenue, annual operating cost, and the salvage value. The two-year project requires immediately purchasing equipment for $59,000. The equipment falls into the MACRS 5-year class. The machine will be sold for $19,000 at the end of two years. The project will bring in additional annual revenue of $99,000, but it is expected to...
"A manufacturing company has just received an order with the following financial data. All dollar values...
"A manufacturing company has just received an order with the following financial data. All dollar values are given in constant dollars, and inflation will impact the annual revenue, annual operating cost, and the salvage value. The two-year project requires immediately purchasing equipment for $60,000. The equipment falls into the MACRS 5-year class. The machine will be sold for $13,000 at the end of two years. The project will bring in additional annual revenue of $85,000, but it is expected to...
"A manufacturing company has just received an order with the following financial data. All dollar values...
"A manufacturing company has just received an order with the following financial data. All dollar values are given in constant dollars, and inflation will impact the annual revenue, annual operating cost, and the salvage value. The two-year project requires immediately purchasing equipment for $56,000. The equipment falls into the MACRS 5-year class. The machine will be sold for $24,000 at the end of two years. The project will bring in additional annual revenue of $121,000, but it is expected to...
"The Simon Machine Tools Company is considering purchasing a new set of machine tools to process...
"The Simon Machine Tools Company is considering purchasing a new set of machine tools to process special orders. The following financial information is available. - Without the project, the company expects to have a taxable income of $441,000 each year from its regular business over the next three years. - With the three-year project, the purchase of a new set of machine tools at a cost of $54,000 is required. The equipment falls into the MACRS three-year class. The tools...
"The Simon Machine Tools Company is considering purchasing a new set of machine tools to process...
"The Simon Machine Tools Company is considering purchasing a new set of machine tools to process special orders. The following financial information is available. - Without the project, the company expects to have a taxable income of $432,000 each year from its regular business over the next three years. - With the three-year project, the purchase of a new set of machine tools at a cost of $41,000 is required. The equipment falls into the MACRS three-year class. The tools...
"The Simon Machine Tools Company is considering purchasing a new set of machine tools to process...
"The Simon Machine Tools Company is considering purchasing a new set of machine tools to process special orders. The following financial information is available. - Without the project, the company expects to have a taxable income of $368,000 each year from its regular business over the next three years. - With the three-year project, the purchase of a new set of machine tools at a cost of $52,000 is required. The equipment falls into the MACRS three-year class. The tools...
"The Simon Machine Tools Company is considering purchasing a new set of machine tools to process...
"The Simon Machine Tools Company is considering purchasing a new set of machine tools to process special orders. The following financial information is available. - Without the project, the company expects to have a taxable income of $423,000 each year from its regular business over the next three years. - With the three-year project, the purchase of a new set of machine tools at a cost of $54,000 is required. The equipment falls into the MACRS three-year class. The tools...
"The Simon Machine Tools Company is considering purchasing a new set of machine tools to process...
"The Simon Machine Tools Company is considering purchasing a new set of machine tools to process special orders. The following financial information is available. - Without the project, the company expects to have a taxable income of $448,000 each year from its regular business over the next three years. - With the three-year project, the purchase of a new set of machine tools at a cost of $58,000 is required. The equipment falls into the MACRS three-year class. The tools...
Your company, Dominant Retailer, Inc., is considering a project whose data are shown below. Revenue and...
Your company, Dominant Retailer, Inc., is considering a project whose data are shown below. Revenue and cash operating expenses are expected to be constant over the project's 5 year expected operating life; annual sales revenue is $99,000.00 and cash operating expenses are $49,750.00. The new equipment's cost and depreciable basis is $155,000.00 and it will be depreciated by MACRS as 5 year property. The new equipment replaces older equipment that is fully depreciated but can be sold for $7,000. In...
Your company, Dominant Retailer, Inc., is considering a project whose data are shown below. Revenue and...
Your company, Dominant Retailer, Inc., is considering a project whose data are shown below. Revenue and cash operating expenses are expected to be constant over the project's 5 year expected operating life; annual sales revenue is $99,000.00 and cash operating expenses are $49,750.00. The new equipment's cost and depreciable basis is $155,000.00 and it will be depreciated by MACRS as 5 year property. The new equipment replaces older equipment that is fully depreciated but can be sold for $7,000. In...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT