Question

One year? ago, your company purchased a machine used in manufacturing for $100,000. You have learned that a new machine is available that offers many advantages and you can purchase it for $150,000 today. It will be depreciated on a? straight-line basis over 10 years and has no salvage value. You expect that the new machine will produce a gross margin? (revenues minus operating expenses other than? depreciation) of $45,000 per year for the next 10 years. The current machine is expected to produce a gross margin of $21,000per year. The current machine is being depreciated on a? straight-line basis over a useful life of 11? years, and has no salvage? value, so depreciation expense for the current machine is $9,091per year. The market value today of the current machine is $60,000. Your? company's tax rate is 35%?,and the opportunity cost of capital for this type of equipment is 12%.Should your company replace its? year-old machine? The NPV of replacing the? year-old machine is_

?(Round to the nearest? dollar.)

Answer #1

One year? ago, your company purchased a machine used in
manufacturing for $115,000. You have learned that a new machine is
available that offers many advantages and you can purchase it for
$165,000 today. It will be depreciated on a? straight-line basis
over 10 years and has no salvage value. You expect that the new
machine will produce a gross margin? (revenues minus operating
expenses other than? depreciation) of $45,000 per year for the next
10 years. The current machine...

One year ago, your company purchased a machine used in
manufacturing for $110,000. You have learned that a new machine is
available that offers many advantages and you can purchase it for
$160,000 today. It will be depreciated on a straight-line basis
over 10 years and has no salvage value. You expect that the new
machine will produce a gross margin (revenues minus operating
expenses other than depreciation) of $45,000 per year for the next
10 years. The current machine...

One year ago, your company purchased a machine used in
manufacturing for $ 110,000. You have learned that a new machine is
available that offers many advantages and you can purchase it for $
170,000 today. It will be depreciated on a straight-line basis
over 10 years and has no salvage value. You expect that the new
machine will produce a gross margin (revenues minus operating
expenses other than depreciation) of $ 60,000 per year for the
next 10 years....

One year ago, your company purchased a machine used in
manufacturing for $115,000. You have learned that a new machine is
available that offers many advantages; you can purchase it for
$140,000 today. It will be depreciated on a straight-line basis
over ten years, after which it has no salvage value. You expect
that the new machine will contribute EBITDA (earnings before
interest, taxes, depreciation, and amortization) of $60,000 per
year for the next ten years. The current machine is...

One year? ago, your company purchased a machine used in
manufacturing for $95,000. You have learned that a new machine is
available that offers many? advantages; you can purchase it for
$160,000 today. It will be depreciated on a? straight-line basis
over ten? years, after which it has no salvage value. You expect
that the new machine will contribute EBITDA? (earnings before?
interest, taxes,? depreciation, and? amortization) of $60,000 per
year for the next ten years. The current machine is...

One year ago, your company purchased a machine used in
manufacturing for $90,000. You have learned that a new machine is
available that offers many advantages; you can purchase it
$150,000 today. It will be depreciated on a straight-line basis
over ten years, after which it has no salvage value. You expect
that the new machine will contribute EBITDA (earnings before
interest, taxes, depreciation, and amortization) of $45,000 per
year for the next ten years. The current machine is expected...

One year? ago, your company purchased a machine used in
manufacturing for $ 100 comma 000. You have learned that a new
machine is available that offers many advantages and you can
purchase it for $ 150 comma 000 today. It will be depreciated on a?
straight-line basis over 10 years and has no salvage value. You
expect that the new machine will produce a gross margin? (revenues
minus operating expenses other than? depreciation) of $ 40 comma
000 per...

One year ago, your company purchased a machine used in
manufacturing for $ 90 comma 000. You have learned that a new
machine is available that offers many advantages; you can purchase
it for $ 140 comma 000 today. It will be depreciated on a
straight-line basis over ten years, after which it has no salvage
value. You expect that the new machine will contribute EBITDA
(earnings before interest, taxes, depreciation, and
amortization) of $ 35 comma 000 per year...

One year ago, your company purchased a machine used in
manufacturing for $ 110 comma 000$110,000. You have learned that a
new machine is available that offers many advantages; you can
purchase it for $ 150 comma 000$150,000 today. It will be
depreciated on a straight-line basis over ten years, after which
it has no salvage value. You expect that the new machine will
contribute EBITDA (earnings before interest, taxes,
depreciation, and amortization) of $ 60 comma 000$60,000 per year...

One year ago, your company purchased a machine used in
manufacturing for $120,000. You have learned that a new machine is
available that offers many advantages and that you can purchase it
for $160,000 today. The CCA rate applicable to both machines is
40%; neither machine will have any long-term salvage value. You
expect that the new machine will produce earnings before interest,
taxes, depreciation, and amortization (EBITDA) of $35,000 per year
for the next ten years. The current machine...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 14 minutes ago

asked 14 minutes ago

asked 18 minutes ago

asked 18 minutes ago

asked 21 minutes ago

asked 33 minutes ago

asked 38 minutes ago

asked 38 minutes ago

asked 47 minutes ago

asked 50 minutes ago

asked 57 minutes ago

asked 1 hour ago