5. A company plans to replace its existing machinery with a new one which costs $1,200,000. The old machinery was purchasedat a cost of $1,200,000 and has an accumulated depreciation balance of $500,000. The new machine is estimated to be usefulfor 5 years. The remaining useful life of the old machinery is also 5 years. The old machinery can be sold now for $500,000. Onthe other hand, the new machinery has a resale value at the end of year 5 amounting to 10% of its cost. The annual cash savingsfrom operations when the new machinery is used is $200,000.Assuming a discount rate of 10%. Compute the net present value if the company will replace the old machinery.$ 132,6684$ 178,160$ (367,332)$ (167,332)

Net present value is the difference between the present value of cash flow and initial investment…

Answered: 5. A company plans to replace its…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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with diagram thank you
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