H Corp is considering the replacement of some machinery that has zero book value anda current market value of P2,800. One possible alternative is to invest in newmachinery that costs P30,000. The new equipment has a four-year service life and anestimated salvage of P3,500, will produce annual cash operating savings of P9,400,and will require a P2,200 overhaul in year 3. The company uses straight-linedepreciation.The net-present-value of H's investment, assuming an 8% cost of capital (ignoringincome taxes) will amount to

The NPV is a widely used tool in capital budgeting and investment decision-making. It helps…

H Corp is considering the replacement of some m a current market value of P2,800. One possi machinery that costs P30,000. The new equipme estimated salvage of P3,500, will produce annua and will require a P2,200 overhaul in year 3 depreciation. The net-present-value of H's investment, assun income taxes) will amount to

H Corp is considering the replacement of some m a current market value of P2,800. One possi machinery that costs P30,000. The new equipme estimated salvage of P3,500, will produce annua and will require a P2,200 overhaul in year 3 depreciation. The net-present-value of H's investment, assun income taxes) will amount to

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Consider an asset that costs $1,075, 196 and is depreciated straight-line to zero over its 15-year tax life. The asset is to be used in a 5-year project; at the end of the project, the asset can be sold for $109, 800. If the relevant tax rate is 0.39, what is the aftertax cash flow from the sale of this asset (SVNOT)?
Provide please answer in text Format
B2b Co. Is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $360,000 and hasa 12-year life and no salvage value. The expected annual income for each year from thos equipment follows. Compute the (a) annual net cash flow, (b) payback period, and (c) accounting rate of return for this equipment. $225,000 ,120,000, 30,000, 38,250, Income 36,750?
Firm X is considering the replacement of an old machine with one that has a purchase price of $70,000. The current market value of the old machine is $22,000 but the book value is $ 37,000. The firm's combined tax rate is 27%. What is the net cash outflow for the new machine after considering the sale of the old machine? Disregard the effect of depreciation of the new machine if acquired.
4
Baghiben
The Drun's Den-Dutdoor Gear is considering a new 6-year project to produce a new tent ine. The equipment necessary would cost $1.29 million and be deprecated using saight ane depreciation to a book value of pero At the end of the project, the equipment can be sold for t5 percent of its ential cost. The company believes that it can sell 23.500 tents per year at a poce of $64 and variable costs of $25 per et The ted costs will be $395.000 per year The project will require an intal investment is net working capital of $193,000 that will be recovered at the end of the project. The required rate of retums 107 percent and the taxes 35 percent What is the NPV? O O O $40146 $14,99 SHO SOL
XYZ company has A piece of new equipment will cost $70,000. The equipment will provide a cost savings of $15,000 per year for ten years, after which it will have a $3,000 salvage value. If the required rate of return is 14%, the equipment's net present value is: a. (8240) b. None of answers are correct c. 9050 d. 23888
A project will increase sales by $184,500 and cash expenses by $88,900. The project will require investment in equipment of $53,000 and be depreciated using straight line depreciation to a zero book value over the four-year life of the project. The company has a marginal tax rate of 21 percent. What is the operating cash flow of the project? $108,552.25 None of these options are correct o $78,306.50 $75,524.00 o $95,600.00
The Wet Corporation has an investment project that will reduce expenses by $30,000 per year for 3 years. The project's cost is $30,000. If the asset is part of the 3 year MACRS category (33.33% first year depreciation) and the company's combined tax rate is 29%, what is the cash flow from the project in year 1? Note: Do not round intermediate calculations. Round your answer to the nearest dollar amount. Multiple Choice $23,650 $24.980 $24.200 $25,660
It is estimated that an investment alternative with an initial investment cost of 250000 TL will generate annual revenues of 85000 TL and annual expenses of 20000 TL. It is expected to have a scrap value of 95000 TL at the end of its 7-year life. Find out how sensitive the investment decision of this investment alternative is to its revenues. (MARR: %10) Select one: a. 0.32294 b. 0.48225 c. 0.05634 d. 0.27838 e. 0.082902 f. 0.1719 g. 0.52003 h. 0.37235
Plant company is contemplating the purchase of a new piece of equipment for $59,000. Plant is in the 20% income tax bracket.