Question

a company is evaluating a machine. the machine cost $240,000, has a 3 year life, and...

a company is evaluating a machine. the machine cost $240,000, has a 3 year life, and has pretax operating cost of $70,000 per year. the cost of the machine will be depreciated to zero over the projects life. the machine will be sold for $50,000 at the end of the projects life. if the tax rate is 22% and the discount rate is 12%, what is the equivalent annual cost for this machine?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
a company is evaluating a machine. the machine cost $240,000, has a 3 year life, and...
a company is evaluating a machine. the machine cost $240,000, has a 3 year life, and has pretax operating cost of $70,000 per year. the cost of the machine will be depreciated to zero over the projects life. the machine will be sold for $50,000 at the end of the projects life. if the tax rate is 22% and the discount rate is 12%, what is the equivalent annual cost for this machine?
Scholastic Co. is evaluating different equipment. Machine A costs $85,000 per year has a four-year life,...
Scholastic Co. is evaluating different equipment. Machine A costs $85,000 per year has a four-year life, and costs $45,000 per year to operate. The machine will be depreciated using straight-line and the relevant discount rate is 8%. The machine will have a salvage value of $20,000 at the end of the project's life. The firm has a tax rate of 21%. Calculate the operating cash flow in year 1. (Enter a negative value)
You are evaluating two different milling machines to replace your current aging machine. Machine A costs...
You are evaluating two different milling machines to replace your current aging machine. Machine A costs $233,463, has a three-year life, and has pretax operating costs of $60,516 per year. Machine B costs $399,822, has a five-year life, and has pretax operating costs of $32,258 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $43,001. Your tax rate is 34 % and your discount rate is 10 %....
Tank Co. is evaluating a project that costs $100,000 and has a 5-year life. Assume that...
Tank Co. is evaluating a project that costs $100,000 and has a 5-year life. Assume that depreciation is prime-cost to zero salvage value over the 5-years, and the equipment can be sold for $6,000 at the end of year 5. The average discount rate for such a project is 10 per cent on such projects. The individual tax rate is 15 per cent and corporate tax rate is 30 per cent. It is projected that they will sell 12000 units...
You are evaluating two different silicon wafer milling machines. The Techron I cost $270,000, has a...
You are evaluating two different silicon wafer milling machines. The Techron I cost $270,000, has a 3-year life, and has pretax operating costs of $73,000 per year. The Techron II costs $470,000, has a 5-year life, and has pretax operating costs of $46,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $50,000. If your tax rate is 24 percent and your discount rate is 10 percent, compute...
Suppose a machine costs $500,000 and requires $75,000 in pre-tax annual operating costs. The machine will...
Suppose a machine costs $500,000 and requires $75,000 in pre-tax annual operating costs. The machine will be fully depreciated on a straight-line basis over its useful life of 10 years, a#er which it will have zero salvage value. If the required return is 12% and the tax rate is 22%, then what is the equivalent annual cost of the machine? A)$146,992.08 B) $135,992.08 C) $152,492.08 D) $88,492.08 E) $40,992.08
Riverview Company is evaluating the proposed acquisition of a new production machine. The machine's base price...
Riverview Company is evaluating the proposed acquisition of a new production machine. The machine's base price is $200,000, and installation costs would amount to $28,000. Also, $10,000 in net working capital would be required at installation. The machine will be depreciated for 3 years using simplified straight line depreciation. The machine would save the firm $110,000 per year in operating costs. The firm is planning to keep the machine in place for 2 years. At the end of the second...
\$250,000 You are considering two machines A B that can be used for the same purpose...
\$250,000 You are considering two machines A B that can be used for the same purpose . Machine A costs will reduce costs by $ 70,000 per year , needs networking capital of $ 20,000 at time zero which be released at the end of the project , has a 5 year straight line depreciable life and can be sold at the end of the project's life for $ 50,000 . Machine B costs $ 320,000 will reduce costs by...
The Virginia Cane Company (VCC) is considering investing in a new cane manufacturing machine that has...
The Virginia Cane Company (VCC) is considering investing in a new cane manufacturing machine that has an estimated life of 4 years. The cost of the machine is $50,000 and the machine will be depreciated straight-line over its 4-year life to a salvage value of $0. While the machine will be fully depreciated over the project’s life, management thinks the cane machine can be sold for $3,000, excluding applicable tax, at project end. In the first year, VCC expects to...
You are evaluating two different silicon wafer milling machines. The Techron I costs $264,000, has a...
You are evaluating two different silicon wafer milling machines. The Techron I costs $264,000, has a 3-year life, and has pretax operating costs of $71,000 per year. The Techron II costs $460,000, has a 5-year life, and has pretax operating costs of $44,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $48,000. If your tax rate is 22 percent and your discount rate is 12 percent, compute...