Q3. Two years ago, a machine was purchased at a cost of $( 2,000,000) to be useful for eight years. Its salvage value at the end of its life is $ 25,000. The annual maintenance cost is $ 25,000. The market value of the present machine is $ 1,200,000. Now, a new machine to cater to the need of the present machine is available at $ 1,500,000 to be useful for six years. Its annual maintenance cost is $ 14,000. The salvage value of the new machine is $ 20,000. Using an interest rate of 12%, find whether it is worth replacing the present machine with the new machine.

Q3. Two years ago, a machine was purchased at a cost of $( 2,000,000) to be useful for eight years. Its salvage value at the end of its life is $ 25,000. The annual maintenance cost is $ 25,000. The market value of the present machine is $ 1,200,000. Now, a new machine to cater to the need of the present machine is available at $ 1,500,000 to be useful for six years. Its annual maintenance cost is $ 14,000. The salvage value of the new machine is $ 20,000. Using an interest rate of 12%, find whether it is worth replacing the present machine with the new machine.

Name: Q3.Two years ago, a machine was purchased at a cost of $( 2,000,000)t
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Description: Q3.Two years ago, a machine was purchased at a cost of $( 2,000,000)to be useful for eight years. Its salvage value at the end of its life is $ 25,000.The annual maintenance cost is $ 25,000. The market value of the presentmachine is $ 1,200,000. No

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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Required Information [The following information applies to the questions displayed below.] Project A requires a $365,000 initial investment for new machinery with a five-year life and a salvage value of $42,000. The company uses straight-line depreciation. Project A is expected to yield annual net income of $25,300 per year for the next five years. Compute Project A's payback period. Choose Numerator: Payback Period 7 Choose Denominator: = Payback Period Payback period =
6
The cost of a new machine is $40,000 and the new machine takes $2,000 to install. At the end of its useful life, its salvage value is $5,000. Under the modified accelerated cost recovery system (MACRS), what is the depreciable value of the new machine? a $35,000 b $37,000 c $42,000 d $40,000
the directed (traight Builtrite is considering purchasing a new machine that would com $80,000 and the machine line) down to $0 over its five-year life. At the end of five years, it is believed that the machine could the side for $15,000 The surrent machine being used was purchased 3 years ago at a cost of $40,000 and is being direct din ter over t 5 year life. The current machine's salvage value now is $12,000. The new machine would increase EBOT by $54000 annually Builtrite's marginal tax rate is 34%, What the RATFOF's associated with the purchase of this machine? $39,040 $38,360 $30,300 $35,040.
Having an issue with this problem.
A new robot has a first cost of $380,000, and an annual operating cost of $88,000 in years 1 and 2, increasing by $10000 per year thereafter. The salvage value of the system is $25,000 regardless of when the system is retired within its maximum useful life of 5 years. Using a MARR of 14% per year, determine the ESL and the respective AW value of the system ESL: a) 1 year b) 4 years c) 5 years d) 3 years AW value of system: a) $204,860 b) $336,284 c) $97,953 d) $496,200
You just bought a new piece of farm machinery for $100,000. You expect the machinery to have a useful, economic life of five years, and you account the asset's depreciation to be $18,000 using the straight-line depreciation methods How much is the salvage value for this asset? O $50,000 O $5000 O $15,000 $10,000
A coal company invests $20 million in a mine estimated to have 25 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 1070000 tons of coal are extracted and sold. What is the depletion for the first year? O $85600 O $856000 $256800 O Cannot be determined from the information provided
onsider the following financial informationabout a retooling project at a computer manufacturing company:• The project costs $2.5 million and has a five-yearservice life.• The retooling project can be classified as sevenyear property under the MACRS rule.• At the end of the fifth year, any assets held for theproject will be sold. The expected salvage valuewill be about 10% of the initial project cost.• The firm will finance 40% of the project moneyfrom an outside financial institution at an interestrate of 10%. The firm is required to repay the loanwith five equal annual payments.• The firm’s incremental (marginal) tax rate on theinvestment is 35%.• The firm’s MARR is 18%.With the preceding financial information,(a) Determine the after-tax cash flows.(b) Compute the annual equivalent worth for thisproject.
4. A company bought a machine three years ago at a cost of $ 55,000 . The expected life at the time of purchase was 10 years with a $ 5,000 salvage value and an annual operating cost of $ 2,700 . A new machine is now under consideration that costs $ 40,000 . It is projected to have a life of 12 years , a salvage value of $ 3,500 and an annual operating cost of $ 7,200 . Compute the required Trade - In Value ( Replacement Value ) of the presently owned machine if the new machine is to be bought using a discount rate of 12 % per year .
An automated assembly robot that cost $300,000 has a recovery period of five years with an expected $50,000 salvage value. If the MACRS depreciation rates for years 1, 2, and 3 are 20.0%, 32.0%, and 19.2%, respectively, what is the depreciation recapture, capital gain, or capital loss, provided the robot was sold after 3 years for $80,000?

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