What is the npv of the project

Assignment Help Finance Basics

Reference no: EM133615863

Problem: TippingToys is considering the purchase of a new toy-making machine that will increase revenues by $50,000 a year and annual costs by $10,000. The new machine will replace an outdated machine with a current book value of $10,000 but if scrapped now can only be sold for $6,000. The new machine will cost $100,000 with shipping and installation fees of $10,000. The machine will be depreciated via 5-year MACRS schedule (20.0%, 32.0%, 19.2%, 11.5%, 11.5%, 5.8%). The firm estimates that the new machine can be sold at the end of its five-year life for $20,000. The new machine will necessitate an investment of $30,000 in working capital that will be fully recovered at the end of the project. Tipping Toys has a 10% cost of capital and a corporate tax rate of 40%. What is the NPV of the project?

Reference no: EM133615863

Questions Cloud

Identify changes or consideration to become investment ready : Identify specific changes or considerations to become investment ready. Explore pros and cons of making the change. How they might measure and report on impact?

What will likely happen to the spot exchange rate and why : What will likely happen to the spot exchange rate and why? Which currency will appreciate and which currency will depreciate in the current spot market?

Write chronological resume : Write chronological resume and Cover letter for a retail salesman job application. The information in the cover letter should match the information in the resum

What is your monthly mortgage payment : The interest rate on the loan is 12% per year. Assume interest rates are compounded monthly. What is your monthly mortgage payment?

What is the npv of the project : TippingToys is considering the purchase of a new toy-making machine that will increase revenues by $50,000 a year. What is the NPV of the project?

What further clues does jane get to mystery of grace poole : What further clues does Jane get to the mystery of Grace Poole when she overhears Leah and the charwoman talking?

What are her total assets : Her retirement account, in which she is fully vested, contains $28,000 in mutual funds. She was just insured with a $200,000 term. What are her total assets?

Analysis of the job and organization : Analysis of the job and organization you would like to apply for. Explain why you would like to apply for this job and why you believe you are qualified?

Find the profitability index of the project : Harris Corp has a project with initial investment requiring $-150,000. If the required rate of return is 0.06, find the Profitability Index (PI) of the project.

User Account

All Pages