YamHash 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 33 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
YamHash 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 33 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
Problem 1PS
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![YamHash 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 33 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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1f70d1f9-72ee-4258-9b9f-0814ce6933de%2F426b10e3-d504-4405-b631-ad992280dfd7%2Fi7446ka_processed.jpeg&w=3840&q=75)
Transcribed Image Text:YamHash 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 33 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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