Relevant initial outlay in this capital budgeting decision

Assignment Help Financial Management

Reference no: EM131519305

Your company is considering replacing an old steel cutting machine with a new one. Two months ago, you sent the company engineer to a training seminar demonstrating the new machine’s operation and efficiency. The $2,500 cost for this training session has already been paid. If the new machine is purchased, it would require $5,000 in installation and modification costs to make it suitable for operation in your factory. The old machine originally cost $50,000 five years ago and is being depreciated by $7,000 per year. The new machine will cost $75,000 before installation and modification. It will be depreciated by $5,000 per year. The old machine can be sold today for $10,000. The marginal tax rate for the firm is 40%. Compute the relevant initial outlay in this capital budgeting decision. A. $72,500 B. $68,000 C. $70,500 D. $78,000

Reference no: EM131519305

Questions Cloud

Calculate the schedule variance-schedule performance index : Calculate the schedule variance, schedule performance index, and cost (actually revenue in case) variance and cost (actually revenue here) performance index.

Statements which describe the relationships between entities : MN405 - What are the statements which describe the relationships between entities? List all the statements in the business case.

Initial investment in fixed assets when evaluating project : What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project? Why?

Match the transaction with the business activity : The following provides a list of transactions and a list of business activities.

Relevant initial outlay in this capital budgeting decision : The marginal tax rate for the firm is 40%. Compute the relevant initial outlay in this capital budgeting decision.

What was the gender makeup of the meeting : What was the approximate size of the meeting? What was the gender makeup of the meeting (male to female ratio)? Were you welcomed to the meeting

From which part of asia most of asian-americans come : From which part of Asia most of Asian-Americans come?How does indigenous Asian culture mix with American experience?

Find the consumer and producer surplus and deadweight loss : Find the consumer and producer surplus and the deadweight loss. Find the price associated with qs (or, plug in qs and solve for p using the supply equation).

Project evaluation-what is the npv of this project : Project Evaluation. Kolby's Korndogs is looking at a new sausage system with an installed cost of $655,000. what is the NPV of this project?

User Account

All Pages