Compute the eac for old and new computer what is the npv of

Assignment Help Finance Basics
Reference no: EM13478303

Suppose we are thinking about replacing an old computer with a new one. The old one cost us $450,000; the new one will cost $580,000. The new machine will be depreciated straight-line to zero over its five-year life. It will probably be worth about $130,000 after five years. The old computer is being depreciated at a rate of $90,000 per year. It will be completely written off in three years. If we don't replace it now, we will have to replace it in two years. We can sell it now for $230,000; in two years it will probably be worth $60,000. The new machine will save us $85,000 per year in operating costs. The tax rate is 38 percent, and the discount rate is 14 percent.

a. Calculate the EAC for old and new computer.

b. What is the NPV of the decision to replace the computer now?

Reference no: EM13478303

Questions Cloud

What is the firms after tax component cost of debt for : a companys 6 coupon rate semiannual payment 1000 par value bond that matures in 25 years sells at a price of 656.95 the
Lee manufacturings value of operations is equal to 900 : lee manufacturings value of operations is equal to 900 million after a recapitalization the firm had no debt before the
Midland telecom provides communication services in iowa : midland telecom provides communication services in iowa nebraska the dakotas and montana. midland purchased goodwill as
Please i want action research for my study the impact of : please i want action research for my study the impact of educational video games on the children quantitative studythis
Compute the eac for old and new computer what is the npv of : suppose we are thinking about replacing an old computer with a new one. the old one cost us 450000 the new one will
The following table shows the nominal returns on us stocks : complete the following problems in either microsoft word or excel. your work must be organized. highlight your final
How model which you have selected will minimize : develop and submit a project plan including implementation steps for the configuration and implementation of a cluster
Directions the current exchange rate between japan and uk : directions the current exchange rate between japan and u.k. is one british pound equals 150 japanese yen. the one year
A fundamental concept in finance is risk versus return : a fundamental concept in finance is the risk versus return concept. the more the risk involved with an investment the

Reviews

Write a Review

Finance Basics Questions & Answers

  Which of following are examples of non-diversifiable risks

You are considering buying some stocks in Continental Grain. Which of the following are examples of non-diversifiable risks?

  You have just invented a new product that you believe will

you have just invented a new product that you believe will make you a millionaire in canada.nbsp however you do not

  What is the effect on income

The required volume of output to produce the motors will not require any incremental fixed overhead. Incremental variable overhead cost is $27.2 per motor. What is the effect on income if Paz decides to make the motors?

  Find the duration of a 6% coupon bond making annual coupon

Find the duration of a 6% coupon bond making annual coupon payments if it has four years to maturity and a yield to maturity of 5%. (assuming a face value of $1,000)

  You decide project i have attached the assignment

i have attached the assignment instructions i need this assignment by friday afternoon. please provide your advise i

  Financial environment of healthcare organizations

What trends or threats will impact financial environment of healthcare organizations? These may include legislative changes, lack of primary care providers/changing demographics.

  What is the firms after-tax component cost of debt

Ross Inc. has issued a bond. The bond has a 12% coupon, paid semiannually, a current maturity of 20 years, and sell for $1,171.59. The firm's marginal tax rate is 40%. What's the firm's after-tax component cost of debt?

  What is the annual inventory holding cost

Ross White's machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughtout the year. These brackets are purchased from a supplier 100 miles away for $15 each.

  What are the reasons for a firm having lower cash from

what are the reasons for a firm having lower cash from operations than working capital from operations? what are the

  Why do organizational structures differ what is the

1.why do organizational structures differ? what is the difference between a mechanistic structure and an organic

  Examine financial statements-prepare cash flow analysis

Given this information, find the NPV, MIRR, and which year the present value cash flows become positive. I need this in an excel spreadsheet as well as 5 slides w/ notes

  By now i am sure all of you have been employed list at

by now i am sure all of you have been employed. list at least 4 items that have been withheld from your paycheck other

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