Login

Create Account
+14156709189
info@expertsmind.com
Submit Homework/Assignment
Get quote & make Payment
Get Solution
Need answers in an excel spreadsheet, finance, Other Engineering
1
Scott Investors, Inc., is considering the purchase of a $447,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straightline method. The market value of the computer will be $75,000 in five years. The computer will replace five office employees whose combined annual salaries are $155,000. The machine will also immediately lower the firm’s required net working capital by $87,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 32 percent.
Required:
Calculate the NPV if the appropriate discount rate is 12 percent.
2
A firm is considering an investment in a new machine with a price of $12.6 million to replace its existing machine. The current machine has a book value of $4.6 million and a market value of $3.6 million. The new machine is expected to have a fouryear 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 $5.1 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 $310,000 in net working capital. The required return on the investment is 9 percent, and the tax rate is 39 percent.
Requirement 1:
(a) What is the NPV of the decision to purchase a new machine? (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 1,234,567.89))
NPV $ n/r
(b) What is the IRR of the decision to purchase a new machine? (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))
IRR n/r %
Requirement 2:
(a)
What is the NPV of the decision to keep the old machine? (Do not include the dollar sign ($). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 1,234,567.89))
NPV $ n/r
(b)
What is the IRR of the decision to keep the old machine? (Do not include the percent sign (%). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))
IRR n/r %
3. 6.value:
4 points
Pilot Plus Pens is deciding when to replace its old machine. The machine’s current salvage value is $1.84 million. Its current book value is $1.21 million. If not sold, the old machine will require maintenance costs of $517,000 at the end of the year for the next five years. Depreciation on the old machine is $242,000 per year. At the end of five years, it will have a salvage value of $209,000 and a book value of $0. A replacement machine costs $3.1 million now and requires maintenance costs of $335,000 at the end of each year during its economic life of five years. At the end of the five years, the new machine will have a salvage value of $506,000. It will be fully depreciated by the straightline method. In five years a replacement machine will cost $3,602,000 . Pilot will need to purchase this machine regardless of what choice it makes today. The corporate tax rate is 31 percent and the appropriate discount rate is 12 percent. The company is assumed to earn sufficient revenues to generate tax shields from depreciation. Should Pilot Plus Pens replace the old machine now or at the end of five years?
Requirement 1:
What is the NPV of the decision to purchase a new machine? (Do not include the dollar sign ($). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 1,234,567.89))
NPV $
Requirement 2:
What is the NPV of the decision to keep the old machine? (Do not include the dollar sign ($). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 1,234,567.89))
Posted Date: 3/21/2012 11:03:16 AM  Location : United States
Ask an Expert
Related Discussions:
Need answers in an excel spreadsheet, finance, Assignment Help, Ask Question on Need answers in an excel spreadsheet, finance, Get Answer, Expert's Help, Need answers in an excel spreadsheet, finance Discussions
Write discussion on Need answers in an excel spreadsheet, finance
Your posts are moderated
Write your message here..
Related Questions
Oil pumps  aircraft engine, OIL PUMPS The oil pumps fitted in a recirc...
OIL PUMPS The oil pumps fitted in a recirculatory system are normally geartype or Gerotor type pumps. The pumps are usually mounted in a pack containing one pressure pump and
Edgewise compression test on a sandwich structure , This test gives a basis...
This test gives a basis for evaluating the loadbearing capability of a sandwich structure when loaded in compression. The specimen should be at least 50 mm wide and the length sho
MICRO PROCESSOR, Describe the operation an 8086 will perform when it excute...
Describe the operation an 8086 will perform when it excutes ADD AX,BX
Avionic systems design primed stability derivatives, Primed stability der...
Primed stability derivatives The rolling and yawing motions are coupled through the cross inertia I XZ due to rotation not being about the principal axes. Since in general air
Math problems solutions matlab, Matlab is a 4th technology selection langua...
Matlab is a 4th technology selection language, which is designed by The MathWorks. It provides an exact processing atmosphere. Matlab works a variety of math features like design o
Physical chemistry, can you answer some problem from physical chemistry wit...
can you answer some problem from physical chemistry with a detailed approach why and how one should choose the steps in solving them.These are just random question that I have no c
Installing aircraft parts, Installing Aircraft Parts: Prior to fit remo...
Installing Aircraft Parts: Prior to fit remove the label from the engine and attach it to the paperwork for safekeeping. Check the engine over to ensure it is complete and chec
Assembly programme, program to work as xor gate
program to work as xor gate
Propeller control, Propeller Control: There is no separate propeller co...
Propeller Control: There is no separate propeller control selector for this engine / propeller combination. Instead of a separate propeller control lever, the governor is desi
Corporate Finance, Will you take a timed online exam
Will you take a timed online exam
Assignment Help
Accounting Assignment Help
Economics Assignment Help
Finance Assignment Help
Statistics Assignment Help
Physics Assignment Help
Chemistry Assignment Help
Math Assignment Help
Biology Assignment Help
English Assignment Help
Management Assignment Help
Engineering Assignment Help
Programming Assignment Help
Computer Science Assignment Help
IT Courses and Help
ExpertsMind Services
Online Tutoring
Projects Assistance
Exam Preparation
Coursework Help
Programming Courses
Engineering Courses
Why Us ?
~Experienced Tutors
~24x7 hrs Support
~Plagiarism Free
~Quality of Work
~Time on Delivery
~Privacy of Work