Yam Hash Inc. is interested in assessing the cash flows associated with the purchase of new equipment. Considering the incremental proposal for which the relevant information is as follows: Purchase price of asset is 5 millions rupees. The installation cost associated with the new machinery is 0.1% of purchase price and falls under the 5-year MACRS class. It is expected that new machine will consume more power and is expected to cost 2% of the purchase price. New machine is expected to generate savings that are equal to 75% of the purchase price of asset for 6 years. After sixth year, machine may be sold @5% of its purchase price. Company falls in 40% tax bracket.
Yam Hash Inc. is interested in assessing the cash flows associated with the purchase of new equipment. Considering the incremental proposal for which the relevant information is as follows: Purchase price of asset is 5 millions rupees. The installation cost associated with the new machinery is 0.1% of purchase price and falls under the 5-year MACRS class. It is expected that new machine will consume more power and is expected to cost 2% of the purchase price. New machine is expected to generate savings that are equal to 75% of the purchase price of asset for 6 years. After sixth year, machine may be sold @5% of its purchase price. Company falls in 40% tax bracket.
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
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Yam Hash Inc. is interested in assessing the cash flows associated with the purchase of new equipment. Considering the incremental proposal for which the relevant information is as follows:
Purchase price of asset is 5 millions rupees. The installation cost associated with the new machinery is 0.1% of purchase price and falls under the 5-year MACRS class. It is expected that new machine will consume more power and is expected to cost 2% of the purchase price. New machine is expected to generate savings that are equal to 75% of the purchase price of asset for 6 years. After sixth year, machine may be sold @5% of its purchase price. Company falls in 40% tax bracket.
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