A firm is considering an investment in a new machine with a price of $16.9 million to replace its existing machine. The current machine has a book value of $6.6 million and a market value of $5.3 million. The new machine is expected to have a 4-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $6.9 million in operating costs each year over the next four years. Both machines will have no salvage value in four years. If the firm purchases the new machine, it will also need an investment of $370,000 in net working capital. The required return on the investment is 12 percent and the tax rate is 22 percent. The company uses straight-line depreciation. What is the NPV of the decision to purchase a new machine? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e. g., 1,234,567.89.) What is the IRR of the decision to purchase a new machine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.) What is the NPV of the decision to purchase the old machine? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e. g., 1,234,567.89.) What is the IRR of the decision to purchase the old machine? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16. )
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Business, 22.06.2019 16:30
Which of the following has the largest impact on opportunity cost
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Business, 22.06.2019 23:10
Amazon inc. does not currently pay a dividend. analysts expect amazon to commence paying annual dividends in three years. the first dividend is expected to be $2 per share. dividends are expected to grow from that point at an annual rate of 4% in perpetuity. investors expect a 12% return from the stock. what should the price of the stock be today?
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Business, 23.06.2019 00:10
Kcompany estimates that overhead costs for the next year will be $4,900,000 for indirect labor and $1,000,000 for factory utilities. the company uses direct labor hours as its overhead allocation base. if 100,000 direct labor hours are planned for this next year, what is the company's plantwide overhead rate?
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Business, 23.06.2019 10:00
Vincent enjoys investing his money in ways that can generate a return. he realizes that also a chance that his investment will decrease in value. this chance is known as a. opportunity cost b. risk c. recession d. deterioration
Answers: 1
A firm is considering an investment in a new machine with a price of $16.9 million to replace its ex...
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