Determine the incremental operating cash inflows

Assignment Help Finance Basics
Reference no: EM131108653

Central Laundry and Cleaners is considering replacing an existing piece of machinery with a more sophisticated machine. The old machine was purchased 3 years ago at a cost of $50,000, and this amount was being depreciated under MACRS using a 5-year recovery period. The machine has 5 years of usable life remaining. The new machine that is being considered costs $76,000 and requires $4,000 in installation costs. The new machine would be depreciated under MACRS using a 5-year recovery period. The firm can currently sell the old machine for $55,000 without incurring any removal or cleanup costs. The firm is subject to a tax rate of 40%. The revenues and expenses (excluding depreciation and interest) associated with the new and the old machines for the next 5 years are given in the table below.

2043_t.jpg

a. Calculate the initial investment associated with replacement of the old machine by the new one.

b. Determine the incremental operating cash inflows associated with the proposed replacement. (Note: Be sure to consider the depreciation in year 6.)

c. Depict on a time line the relevant cash flows found in parts a and b associated with the proposed replacementdecision.

Reference no: EM131108653

Questions Cloud

Data type in programming languages : What is the range of the short data type in programming languages?
Production of lollipops is one of fixed proportions : Assume that the production of lollipops is one of fixed proportions. To produce one case of lollipops, it takes 0.5 person-hours and 1 machine-hour. Assume that the hourly wage rate is $9, and the hourly rental rate is $25. Draw the expansion path fo..
Find the resonant frequency : Find the resonant frequency, the unloaded Q, and the loaded Q.
Critical thinking-writing considering psychopaths : Be sure to read Jennifer Kahn's article "Can You Call a 9-Year Old a Psychopath?" to answer these questions properly:
Determine the incremental operating cash inflows : Calculate the initial investment associated with replacement of the old machine by the new one. Determine the incremental operating cash inflows associated with the proposed replacement.
Identifying a medicine : A healthcare center in Baltimore employs seven doctors and two receptionists. Patients are registered with one doctor, but can arrange appointments with any available one. These appointments may subsequently be cancelled. Some appointments result ..
Which deregulation policies impacted the us economy : Discuss at least two (2) areas in which these deregulation policies impacted the U.S. economy overall and may have had roles in laying the foundation for the Great Recession of 2008. Provide a rationale for your response
You implement to assist katherine and her family : a. What strategies would you implement to assist Katherine and her family to settle into care? Include any actions you would carry out prior to Katherine starting as well as actions you may complete on her first day?
A temporary difference that will result in future taxable : A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability.

Reviews

Write a Review

Finance Basics Questions & Answers

  Test your ability to apply the concepts and techniques

The following questions are designed to test your ability to apply the concepts and techniques covered in the course. Answer them as fully as possible, identifying each by number. Each answer should be 3-4 pages in length.

  Should equipment be replaced

What question below can be answered by comparing a company's ratios with industry standards?

  Merger analysis-identify two success mergers

Analyze the successes and failures of mergers by addressing following: a) Determine two organizations that have successfully merged.

  Residual standard deviation for the transformed data

In the preceding exercises, why can the residual standard deviation for the transformed data be compared to the residual standard deviation for the original data?

  Describe the public nature of the issue

Statement of the Problem: Describe the public nature of the issue or problem addressed by your request. Justify your case through measures of need or demand for services provided through the program, illustrated delivery gaps among for profit, non..

  What is the yield to maturity

Jensen Company issues bonds that bear a 6 percent coupon, payable semiannually. The bond matures in 8 years and has a $1,000 face value. Currently, the bond sells at par. What is the yield to maturity? (Please show work)

  Discuss how you would design a foreign exchange hedging

imagine you are the treasurer of a japanese company exporting electronic equipment to the united states. discuss how

  Determine the pretax required return

The Gecko Corporation and the Gordon Corporation are two firms whose business risk is the same but they have different dividend policies. Gecko pays no dividends and Gordon has an expected dividend yield of 6%.

  Determining future value for given condition

Find out  the future value three years hence of $1000 invested in an account with a stated annual interst rate of 8%:

  Net working capital for the pdas will be 20 per- cent of

conch republic electronics is a midsized electron- ics manufacturer located in key west florida. the company president

  The most reasonable estimation of insurance need?

Which of these four methods would result in the most reasonable estimation of insurance need?

  Compare the eective annual rate on these investments

Here are some alternative investments you are considering for one year. (i) Bank A promises to pay 8% on your deposit compounded annually. (ii) Bank B promises to pay 8% on your deposit compounded daily. Compare the eective annual rate (EAR) on..

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