Solution-Opportunity cost of capital for type of equipment

Opportunity cost of capital for type of equipment

Assignment Help Finance Basics

Reference no: EM131701646

One year? ago, your company purchased a machine used in manufacturing for $95,000.

You have learned that a new machine is available that offers many? advantages; you can purchase it for $140,000 today. It will be depreciated on a? straight-line basis over ten? years, after which it has no salvage value. You expect that the new machine will contribute EBITDA? (earnings before? interest, taxes,? depreciation, and? amortization) of $40,000 per year for the next ten years. The current machine is expected to produce EBITDA of $21,000 per year. The current machine is being depreciated on a? straight-line basis over a useful life of 11? years, after which it will have no salvage? value, so depreciation expense for the current machine is $8,636 per year. All other expenses of the two machines are identical. The market value today of the current machine is $50,000. Your? company's tax rate is 40%?, and the opportunity cost of capital for this type of equipment is12%.

The NPV of the replacement is $____?

Is it profitable to replace the? year-old machine?

Reference no: EM131701646

Questions Cloud

Complete john federal tax return : John Williams (birthdate August 2, 1974) is a single taxpayer, and he lives at 1324 Forest Dr., Reno, NV 89501. Complete John's federal tax return

Reviewing the financial statements of crescent city : When reviewing the financial statements of Crescent City, Councilwoman Peggy Doubleton noticed that the city uses an Allowance for uncollectible property taxes.

Equity of intel corp : You are an analyst who covers the equity of Intel Corp. Each Intel stock will pay a dividend of $5.3 a year from now

Problem based on raising taxes or service charges : Joe Babitt, a former executive of T-Mart, just started a term as mayor of Saulk Center. For the past several days he has been looking for a way.

Opportunity cost of capital for type of equipment : The market value today of the current machine is $50,000. Your? company's tax rate is 40%?, and the opportunity cost of capital for this type of equipment is12%

Produce a list of steps required to install a windows server : You are the systems administrator for Cybixx, a manufacturer and distributor of vending machines. Cybixx currently has three facilities.

What is the identity trait or category you are depicting : What is the identity trait or category you are depicting? How would you define it? How do other people perceive or understand this element of your identity?

Discount and rate of return are one and the same thing : Hint: Use the perpetuity formula. Remember the rate of discount and rate of return are one and the same thing.

Write description of your population and plan idea you have : Ethics are important in any area but particularly in healthcare. Write description of your population and plan idea you have for addressing their health needs.

User Account

All Pages

Opportunity cost of capital for type of equipment

Reference no: EM131701646

Reference no: EM131701646

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT