### Company is considering purchasing new machine

Assignment Help Financial Management
##### Reference no: EM131583199

A company is considering purchasing a new machine for \$350,000. It will cost an additional \$50,000 to do the site preparation. With the new machine installed, revenues will increase \$100,000 per year. The machine will be used for five years, with an expected salvage value of \$50,000. At an interest rate of 11%, would the purchase of the machine be justified? Use PW and AW. Do you get the same answer? What is the IRR? Is it a good investment based on IRR? (MARR is also 11%)

#### Questions Cloud

 What is the value of maxwell mining stock : Maxwell Mining Company's ore reserves are being depleted, so its sales are falling. what is the value of Maxwell Mining's stock? Calculate the depreciation expense : Calculate the depreciation expense for Corky’s Bedding Corp. What is stock value per share : If Scampini has 45 million shares of stock outstanding, what is the stock's value per share? Purchase of an apartment complex as an investment : You are considering the purchase of an apartment complex as an investment. What is the complex worth to you at your 8% Cap ate? Company is considering purchasing new machine : A company is considering purchasing a new machine for \$350,000. It will cost an additional \$50,000 to do the site preparation. How many years to double initial amount : How many years to double initial amount if interest rate is 7.2% compounded annually? Recently collected data for major research project : You are in the process of analyzing the recently collected data for a major research project for you company. Prepare monthly and yearly cash flow for five years : Prepare monthly and yearly cash flow for 5 years. Make it worthwhile to incur compensating balance : What interest rate would make it worthwhile to incur a compensating balance of \$21,000 in order to get a 1 percent lower interest rate on a 1 year,

### Write a Review

#### Calculate the capital needs of the couple at retirement

Calculate the capital needs of the couple at retirement and the current value (today’s value) of their retirement needs.

#### Debt with both face and market value

Salmon Inc. has debt with both a face and a market value of \$3,000. This debt has a coupon rate of 7% and pays interest annually. The expected earnings before interest and taxes is \$1,200, the tax rate is 34%, and the unlevered cost of capital is 12%..

#### Growth rate both bond and common stock are issued

Suppose you’re given with the following information for some assets; a 16-year 3.6%-coupon bond of semi-annual coupon payment with face value as \$1,000, a common stock of \$3.20 current expected dividend with 2.5% growth rate Both bond and common stoc..

#### The expansion requires immediate outflow

S. Miller is looking to expand an existing project. The expansion requires an immediate outflow (an investment today) of \$77 million. S. Miller anticipates that the project will generate one future cash flow of \$195 million that will arrive at the en..

#### Calculate the an accounting rate of return-net present value

Calculate the An accounting rate of return and The net present value.

#### The current exchange rate between french franc and us dollar

The current exchange rate between French franc and US dollar is FF 5.529 per dollar. Last month this rate was FF 5.491 per dollar. a) FF has appreciated b) US \$ has depreciation c) FF has depreciated d) US \$ has appreciated

#### What is the amount of the operating cash flow

The firm is entirely equity financed and has a profit margin of 5% and tax rate of 35%. What is the amount of the operating cash flow?

#### What will be the variance of the portfolio

The correlation between the two stocks is .65. If you put 30% in stock US and 70% in stock UK, what will be the variance of the portfolio. ?

#### What complications do class action suits present when

case analyses select two court cases from different chapters from the list below and respond in writing to the case

#### Asset structure balance sheet structure capital structure

Discuss the different ways these statements are used each please: Asset Structure Balance Sheet Structure Capital Structure Liquidity Structure Financial Indicators Positively Influence Profitability and Why?

#### Traditional model of strategic planning and management

Strategically significant differences between NFPs and FPs include all of the following except: The traditional model of strategic planning and management was conceived and developed, primarily, to serve the interest of. Long-term planning for govern..

#### What is the tax-equivalent yield of tax-free

What is the tax-equivalent yield of a tax-free 6% municipal bond if the investor is in the 28% federal tax brackets?