5. A company plans to replace its existing machinery with a new one which costs $1,200,000. The old machinery was at a cost of $1,200,000 and has an accumulated depreciation balance of $500,000. The new machine is estimated t for 5 years. The remaining useful life of the old machinery is also 5 years. The old machinery can be sold now for $50 the other hand, the new machinery has a resale value at the end of year 5 amounting to 10% of its cost. The annual ca from operations when the new machinery is used is $200,000. Assuming a discount rate of 10%. Compute the net present value if the company will replace the old machinery. $ 132,668 $ 178,160 4 $12672321
5. A company plans to replace its existing machinery with a new one which costs $1,200,000. The old machinery was at a cost of $1,200,000 and has an accumulated depreciation balance of $500,000. The new machine is estimated t for 5 years. The remaining useful life of the old machinery is also 5 years. The old machinery can be sold now for $50 the other hand, the new machinery has a resale value at the end of year 5 amounting to 10% of its cost. The annual ca from operations when the new machinery is used is $200,000. Assuming a discount rate of 10%. Compute the net present value if the company will replace the old machinery. $ 132,668 $ 178,160 4 $12672321
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 18P: Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting...
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![5. A company plans to replace its existing machinery with a new one which costs $1,200,000. The old machinery was purchased
at a cost of $1,200,000 and has an accumulated depreciation balance of $500,000. The new machine is estimated to be useful
for 5 years. The remaining useful life of the old machinery is also 5 years. The old machinery can be sold now for $500,000. On
the other hand, the new machinery has a resale value at the end of year 5 amounting to 10% of its cost. The annual cash savings
from operations when the new machinery is used is $200,000.
Assuming a discount rate of 10%. Compute the net present value if the company will replace the old machinery.
$ 132,668
4
$ 178,160
$ (367,332)
$ (167,332)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcdf42469-68db-4581-86b3-bcab956ad9dc%2Fb09e93c7-8a88-4f80-8c48-2d81595a9834%2Flugq09d_processed.png&w=3840&q=75)
Transcribed Image Text:5. A company plans to replace its existing machinery with a new one which costs $1,200,000. The old machinery was purchased
at a cost of $1,200,000 and has an accumulated depreciation balance of $500,000. The new machine is estimated to be useful
for 5 years. The remaining useful life of the old machinery is also 5 years. The old machinery can be sold now for $500,000. On
the other hand, the new machinery has a resale value at the end of year 5 amounting to 10% of its cost. The annual cash savings
from operations when the new machinery is used is $200,000.
Assuming a discount rate of 10%. Compute the net present value if the company will replace the old machinery.
$ 132,668
4
$ 178,160
$ (367,332)
$ (167,332)
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