Calculate the maximum price of machine, Financial Management

Assignment Help:

Silvana Zhang of Sajjad Jafri & Geopeng Li Limited is considering purchasing a new widget making machine. She would like to know the maximum price she should pay for the new machine.

1. The new machine will replace the existing machine, which has a current market value of $1,000,000.

2. New machine will reduce before tax operating cost by $300,000 per year for 15 years.

3. The old machine is expected to last for another 10 years and will have a salvage value of $100,000 at the end of 10 years.

4. The new machine is expected to last for 15 years and will have a salvage value of $200,000.

CCA rate is 20%, tax rate is 30%, and the required rate of return is 15%

 

 


Related Discussions:- Calculate the maximum price of machine

What is accumulated depreciation?, What is accumulated depreciation? De...

What is accumulated depreciation? Depreciation is the provision of an asset's initial cost over time.  Accumulated depreciation is the sum of all the depreciation expense that

Operating cycle , using the operating cycle and any other financial managem...

using the operating cycle and any other financial management knowledge,discuss the applicabilty of such cycle to poultry

Pvif, how do we get the pvif of a perpetuity

how do we get the pvif of a perpetuity

Define variants of basic interest rate and currency swaps, Briefly discuss ...

Briefly discuss some variants of the basic interest rate and currency swaps. Answer:  In place of the basic fixed-for-floating interest rate swap, there are as well zero-coupo

What does it mean if this value were zero, What does it mean when we say th...

What does it mean when we say that the correlation coefficient for two variables is -1? What does it mean if this value were zero? What does it mean if it were +1? Correlation

Explain about the non-convertible debentures, Expalin about the Non-Convert...

Expalin about the Non-Convertible Debentures (NCDs) NCDs are plain debenture securities issued by corporations. They are normally medium term in nature, maturing between 1 to 8

Option-adjusted spread, The Option-Adjusted Spread (OAS) is a measu...

The Option-Adjusted Spread (OAS) is a measure of the yield spread (expressed in basis points) which can be used to convert differences between the values an

Is conservatism an investment strategy, Q. Is Conservatism an investment st...

Q. Is Conservatism an investment strategy? Conservatism - An investment strategy aimed at long-term capital appreciation with low risk; moderate; cautious; opposite of aggressi

Explain the benefits of delegation from point of view of yt, YT is the Fina...

YT is the Finance Manager of SBM Magazine Publishing Company. He has recently had his appraisal and was expecting that he would get a excellent review, as he felt that he had met a

Explain the terminologies of finance, Explain the terminologies of finance ...

Explain the terminologies of finance Raise and efficiently utilise funds which are your disposal (or at least try to).That a business organisation also needs to do the same can

Write Your Message!

Captcha
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