Question

You are tasked with evaluating the purchase of a vending machine for the snack room. The...

You are tasked with evaluating the purchase of a vending machine for the snack room. The base price is $4,000 and it would cost another $1,000 to modify the machine to install the machine. The equipment falls in the MACRS 3 year class of depreciation with rates of 33%, 45%, 15% and 7%. The machine would require an investment in snacks (inventory/net operating working capital) of $800. The machine would produce revenue of $3,000 per year with costs of $800 per year. The firm’s tax rate is 38%. The firm plans on selling the machine at the end of three years for $1500 and recovering their investment in net working capital at that time as well.

What is the net sale price at time 3 when the equipment is sold?

Business   Finance   
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
The Johnson Company is evaluating the proposed acquisition of a new machine. The machine's basic price...
The Johnson Company is evaluating the proposed acquisition of a new machine. The machine's basic price is $300,000 and it would cost another $20,000 to modify it for special use by the firm. The machine falls into the MACRS 3-year class (33% depreciation in year 1, 45% in year 2, 15% in year 3 and 7% in year 4), and it would be sold after 3 years for $80,000. The machine will require an increase in net working capital of...
The Johnson Company is evaluating the proposed acquisition of a new machine. The machine's basic price...
The Johnson Company is evaluating the proposed acquisition of a new machine. The machine's basic price is $70,000 and it would cost another $20,000 to modify it for special use by the firm. The machine falls into the MACRS 3-year class (33% depreciation in year 1, 45% in year 2, 15% in year 3 and 7% in year 4), and it would be sold after 3 years for $80,000. The machine will require an increase in net working capital of...
he Campbell Company is evaluating the proposed acquisition of a new milling machine. The machine's base...
he Campbell Company is evaluating the proposed acquisition of a new milling machine. The machine's base price is $54,000, and it would cost another $6000 to modify it for special use for your firm. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $24,000. The machine would require an increase in net working capital (inventory) of $2,500. The milling machine would have no effect on revenues, but it is expected to save...
Jones Crusher Company is evaluating the proposed acquisition of a new machine. The machine will cost​...
Jones Crusher Company is evaluating the proposed acquisition of a new machine. The machine will cost​ $190,000, and it will cost another​ $33,000 to modify it for special use by the firm. The machine falls into the MACRS 3minusyear ​class, and it will be sold after 3 years of use for​ $110,000. The machine will require an increase in net working capital of​ $9,000 and will have no effect on​ revenues, but is expected to save the firm​ $90,000 per...
38. You are evaluating a potential investment in equipment. The equipment's basic price is $190,000, and...
38. You are evaluating a potential investment in equipment. The equipment's basic price is $190,000, and shipping costs will be $5,700. It will cost another $24,700 to modify it for special use by your firm, and an additional $11,400 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 27,800 at...
You are evaluating a potential investment in equipment. The equipment's basic price is $184,000, and shipping...
You are evaluating a potential investment in equipment. The equipment's basic price is $184,000, and shipping costs will be $3,700. It will cost another $23,900 to modify it for special use by your firm, and an additional $12,900 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 29,200 at the...
36. You are evaluating a potential investment in equipment. The equipment's basic price is $133,000, and...
36. You are evaluating a potential investment in equipment. The equipment's basic price is $133,000, and shipping costs will be $4,000. It will cost another $20,000 to modify it for special use by your firm, and an additional $8,000 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 24,800 at...
You are evaluating a potential investment in equipment. The equipment's basic price is $163,000, and shipping...
You are evaluating a potential investment in equipment. The equipment's basic price is $163,000, and shipping costs will be $4,900. It will cost another $21,200 to modify it for special use by your firm, and an additional $8,200 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 29,600 at the...
The Clouse Company is evaluating the proposed acquisition of a new milling machine. The machine's price...
The Clouse Company is evaluating the proposed acquisition of a new milling machine. The machine's price is $180,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $50,000. The machine would require an increase in net working capital of $7,000. The milling machine would have no effect on revenues, but it is expected to save the firm $50,000 per year in before-tax operating costs, mainly labor. Clouse's marginal tax rate is 30%...
Premier Steel, Inc. is considering the purchase of a new machine for $100,000 that has a...
Premier Steel, Inc. is considering the purchase of a new machine for $100,000 that has a useful life of 3 years. The firm’s cost of capital is 11% and the tax rate is 40%. This machine will be sold for its salvage value of $20,000 at the end of 3-years. The machine will require an investment of $2,500 in spare parts inventory upon installation. The machine will cost $8,000 to ship and $4,000 to install and modify it. Sales are...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT