00 %24 %23 A machine purchased three years ago for $313,000 has a current book value using straight-line depreciation of $189,000; its operating expenses are $32,000 per year. A replacement machine would cost $236,000, have a useful life of ten years, and would require $9,000 per year in operating expenses. It has an expected salvage value of $65,000 after ten years. The current disposal value of the old machine is $74,000; if it is kept 10 more years, its residual value would be $20,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Machine Purchase New Machine Total costs Should the old machine be replaced? < Prev 6 of 6 e to search Next M f5 91 81 61 LL 12 Su prt sc 1A4 delete 3. home 9. 67 -> backspace R nu H. enter B. pause T shi alt alt

00 %24 %23 A machine purchased three years ago for $313,000 has a current book value using straight-line depreciation of $189,000; its operating expenses are $32,000 per year. A replacement machine would cost $236,000, have a useful life of ten years, and would require $9,000 per year in operating expenses. It has an expected salvage value of $65,000 after ten years. The current disposal value of the old machine is $74,000; if it is kept 10 more years, its residual value would be $20,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Machine Purchase New Machine Total costs Should the old machine be replaced? < Prev 6 of 6 e to search Next M f5 91 81 61 LL 12 Su prt sc 1A4 delete 3. home 9. 67 -> backspace R nu H. enter B. pause T shi alt alt

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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10- In a capital project, an old machine, which was purchased at a cost of 600.000 TL 3 years ago and had a useful life of 5 years will be sold now at a price of 300.000 TL. The machine also had a salvage value of X. The company applies accelerated depreciation method. Tax rate is 40%. In order to produce a net disposal cash inflow of 269.472 TL, what should be the X? 60.000 TL 80.000 TL 100.000 TL 120.000 TL
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7 A firm’ management is planning to replace an old machinewith a three year remaining life and $5,000 per year depreciation by a new machine. The new machine costs $27,000. The depreciation expense on the new machine would be $9,000 per year. By using the new machine, expenses (excluding depreciation) will reduce from $55,000 to 40,000 per year. Assume a tax rate of 40 percent. What are OCF of each alternative (old-new machine)? What are relevant cashflows? (Assume that the change in the machine does not affect existing revenue of $100,000). Thank you.
vvk.3 You are evaluating two different milling machines to replace your current aging machine. Machine A costs $236,244, has a three-year life, and has pretax operating costs of $67,855 per year. Machine B costs $417,560, has a five-year life, and has pretax operating costs of $32,660 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $35,626. Your tax rate is 34 % and your discount rate is 10 %. What is the EAC for Machine A?
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#24 * Using NPW to Decide Between Competing Projects: Machine X has an initial cost of $12,000 and annual maintenance of $700 per year. It has a useful life of four years and no salvage value at the end of that time. Machine Y costs $22,000 initially and has no maintenance costs during the first year. Maintenance is $200 at the end of the second year and increases by $200 per year thereafter. Machine Y has a useful life of eight years and an anticipated salvage value of $5,000 at the end of its useful life. If the MARR is 6%, what is the approximate Net Present Worth (NPW) of machine Y? A. -$33,015 B. -$23,781 C. -$22,831 D. -$19,365
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