What is the npv of replacing the old machine

Assignment Help Finance Basics

Reference no: EM131477069

Question: The "Car Clean" company operates a car wash business. The company bought a machine 2 years ago at the price of $60,000. The life span of the machine is 6 years and the machine has no disposal value, the current market value of the machine is $20,000. The company is considering buying a new machine. The cost of the new machine is $100,000 and its life span is 4 years. The new machine has a disposal value of $20,000. The new machine is faster then the old one; thus the company believes the revenue will increase from $1 million annually to $1.03 million. In addition the new machine is expected to save the company $10,000 in water and electricity costs. The discount rate of "Car Clean" is 15% and the corporate tax rate is 40%. What is the NPV of replacing the old machine?

Reference no: EM131477069

Questions Cloud

The journal entry to record the payment of the dividend : Fetzer Company declared a $0.25 per share cash dividend. The journal entry to record the payment of the dividend is:

Determine how to effectively differentiate for content : Determine how to effectively differentiate for content, process, and product based on student readiness and student interest for Mary and Davion.

What is the break-even point of the bathrobe department : The "Less Is More" company manufactures swimsuits. The company is considering expanding to the bath robes market. The proposed investment plan includes.

Who has the stronger arguments in tropical timber dispute : Who has the stronger arguments in the tropical timber dispute? What are the business implications of each of this dispute?

What is the npv of replacing the old machine : The "Car Clean" company operates a car wash business. The company bought a machine 2 years ago at the price of $60,000. The life span of the machine is 6 years.

Discuss the effectiveness and the limitations : Discuss the effectiveness and the limitations. Describe how the emotion, thought, and behavior components of the models interrelate and influence one another.

Normally distributed random variable with mean : X is a normally distributed random variable with mean 10 and variance 24.

Which photocopy machine should the firm buy : A company is considering whether to buy a regular or color photocopier for the office. The cost of the regular machine is $10,000, its life span is 5 years.

What is the minimum number of cans for sell annually : The Coka company is a soft drink company. Until today the company bought empty cans from an outside supplier that charges Coka $0.20 per can.

User Account

All Pages