Calculate the npv of machine, Basic Statistics

Assignment Help:

Kenneth Su Gold Corp (KSGC) is considering the purchase of a new piece of machinery. The new machinery would cost $80,000. You are given the following facts:

  • The new machine will replace an existing machine that has a current market value of $30,000.
  • The new machine would reduce before tax operating costs by $15,000 per year for 10 years. These cost savings would occur at year-end.
  • The old machine is now 5 years old. It is expected to last for another 10 years, and will have no resale value at the end of those 10 years. It was purchased for $60,000 and is being depreciated at a CCA rate of 20%.
  • The new machine will also be depreciated at a CCA rate of 20%. KSGC expects to be able to sell the machine for $10,000 at the end of 10 years. At that time KSGC plans to reinvest in a new machine in the same CCA pool.
  • The new machine requires a one-time increase in net working capital of $5,000. This amount is required at the beginning of the project and is fully recovered at the project's end.
  • The appropriate discount rate is 12% and the tax rate is 40%.

What is the NPV associated with replacing the machine? 

 


Related Discussions:- Calculate the npv of machine

Mean Deviation, Mean Deviation The two methods of dispersion discussed abo...

Mean Deviation The two methods of dispersion discussed above namely range and quartile deviation are not measure of dispersion in the strict sense of te term because they do not s

Operation research, Meaning and solving example using north-west corner in ...

Meaning and solving example using north-west corner in Transportation problem

Graph, what is the difference between histogram and historigram

what is the difference between histogram and historigram

Help, How many different license plate of 5 digits can be made if the most ...

How many different license plate of 5 digits can be made if the most let digit is 4 and the second digit from left is an odd number

Define block grant, Define block grant A federal grant that consolidates, ...

Define block grant A federal grant that consolidates, for a wide reason or any type of purpose, funds previously awarded for a wide variety of activities.

Binomial expansion, what is the largest coefficient of (1+3x)^4 is ?

what is the largest coefficient of (1+3x)^4 is ?

Cash discount., Cash discount A payment received, given if payment is comp...

Cash discount A payment received, given if payment is completed within a stated age of occasion, Refer to TRADE DISCOUNT,

Calculate the probability of coin, Q1. If you throw a coin 5 times, what is...

Q1. If you throw a coin 5 times, what is the probability of: - throwing 5 heads - throwing 4 tails - throwing 3 heads and 2 tails Q2. Construct a tree diagram to verify your ans

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd