The Sound and truck company is considering a replacement of a sintered plant with one with better technology and efficiency. The machine to be replaced has a book value (book value) of $35,000 and the remaining useful life is 3 years, it could be sold today for $14,500. The new sintering machine to buy is priced at $250,000. The useful life of said machine is 10 years and its auction price at the end of its useful life will be $70,000. It is expected to have excellent savings in fuel oil consumption as well as in repairs and calibration adjustments, all this will ensure a production without defects, of high quality. The savings are estimated to be $31,250. By year. All of the above if the machinery is purchased and installed. The company is with the idea of obtaining at least 18% of MARR in this operation. And the taxes payable will be of the order of 40% for ISR (Income Tax Return) purposes in Mexico. It is depreciated on a straight-line basis, check the depreciation tables for machinery. 1. Perform the calculations step by step and with formulas 2. What would you recommend to the company?
The Sound and truck company is considering a replacement of a sintered plant with one with better technology and efficiency. The machine to be replaced has a book value (book value) of $35,000 and the remaining useful life is 3 years, it could be sold today for $14,500.
The new sintering machine to buy is priced at
$250,000. The useful life of said machine is 10 years and its auction price at the end of its useful life will be $70,000. It is expected to have excellent savings in fuel oil consumption as well as in repairs and calibration adjustments, all this will ensure a production without defects, of high quality. The savings are estimated to be $31,250. By year. All of the above if the machinery is purchased and installed.
The company is with the idea of obtaining at least 18% of MARR in this operation. And the taxes payable will be of the order of 40% for ISR (Income Tax Return) purposes in Mexico. It is
1. Perform the calculations step by step and with formulas
2. What would you recommend to the company?
Step by step
Solved in 3 steps
