Should the new lathe be purchased

Assignment Help Financial Management
Reference no: EM13200868

Strong Tool Company has been considering purchasing a new lathe as a replacement for a fully depreciated lathe that can last 5 more years. The new lathe is expected to have a 5-year life and depreciation charges of $2,000 in year 1; $3,200 in year 2; $1,900 in year 3; $1,200 in both year 4 and year 5; and $500 in year 6. The firm estimates the revenues and expenses for the new and the old lathes to be as shown in the following table. The firm is subject to a 40% tax rate. Should the new lathe be purchased? The price of the new lathe is $ 10,000 and the cost of capital is 10%, annually.

Year

New lathe

Old lathe


 

Revenue

Expenses (excl. depr. and int.)

Revenue

Expenses (excl. depr. and int.)


1

$40,000

$30,000

$35,000

$25,000


2

$41,000

$30,000

$35,000

$25,000


3

$42,000

$30,000

$35,000

$25,000


4

$43,000

$30,000

$35,000

$25,000


5

$44,000

$30,000

$35,000

$25,000


Reference no: EM13200868

Questions Cloud

Write a function which expresses total area of display area : He has 180 linear feet of fencing material to use to fence in the display area. Write a function which expresses the total area of the display area in terms of the length x of the side of the display area opposite the building.
What is current prevailing weekly wage rate in labor market : A profit maximizing monopolist hires workers in a perfectly competitive labor market. Employing the last worker increased the firm's total weekly output from 110 units to 111 units and caused the firm's weekly revenues to rise.
Define a steep mountain is inclined degree to the horizontal : A steep mountain is inclined 74 degree to the horizontal and rises 3400 ft above the surrounding plain. A cable car is to be installed that will travel from a point 910 ft from the base (along the horizontal) to the top of the mountain.
What integer would represent your total budget : 80,000 loan and a 38,250 mustbe repaid within ten years. What integer would represent your total budget?
Should the new lathe be purchased : The firm estimates the revenues and expenses for the new and the old lathes to be as shown in the following table. The firm is subject to a 40% tax rate. Should the new lathe be purchased?
Find the amount of material needed to create such logo : Find the amount of material needed to create such logo.
Find the area of the given region : A region of a certain solid consists of a square and a semicircle with a circular hole. Find the area of the given region. side of square is 9 in. and the radius is 2.5 in.
State times are very closely approximated by a normal curve : At one high school, the mean time for running the 100-yard dash is with a standard deviation of 0.9 seconds. The times are very closely approximated by a normal curve. Find the percent of times that are:
Determine the bonds face value : Draw a clear completely labeled cash flow diagram of the entire bond transcation using dollar accounts where they are are known and $X to represent the bond's face value.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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