Determine the rate for computer-based central office switch, Financial Management

Assignment Help:

SWBT Company must decide whether to repair a telephone company computer-based central office switch or purchase a new one. The existing switch originally cost $750,000 and is fully depreciated. The switch can continue to be used if maintenance expenses of $400,000 (this amount is considered a fully taxable expense) are expended now, after which the switch would last 3 more years and have a salvage value of $50,000 at the end of the 3 years.  The new switch will cost $600,000, will last 5 years, and will have a salvage value of $100,000. Due to its age, the old switch will require $20,000 more per year to maintain than the new switch. If the new switch is purchased, the existing switch can be sold in its present condition for $25,000. SWBT has a required return of 12% and a 34% tax rate. What choice should SWBT make?

 


Related Discussions:- Determine the rate for computer-based central office switch

Type of hedge funds, What are the Types of Hedge Funds? Please provide me r...

What are the Types of Hedge Funds? Please provide me report on Types of Hedge Funds.

Global economy, Global Economy: The size of the world stock market grew...

Global Economy: The size of the world stock market grew steadily in the 1970s and 1980s and crossed the $12 trillion figure in 1993. The share of the US market decreased tremen

State about the country analysis and political risk, Country analysis and p...

Country analysis and political risk Country analysis could use tools for example PEST factors in order to strategically analyse countries. Political risk

Define comparative advantage related to currency swap market, How does the ...

How does the theory of comparative advantage relate to the currency swap market? Answer:  Name recognition is very important in the international bond market. With no it, even a

gaaps that are mandatory, a) Talk about in brief the various GAAPs that ar...

a) Talk about in brief the various GAAPs that are mandatory to be followed. b) What are the several components of total cost.

Ways and means advances, WAYS AND MEANS ADVANCES (WMAs) WMA is not a pe...

WAYS AND MEANS ADVANCES (WMAs) WMA is not a permanent source of financing government deficit. But, this is likely to provide greater autonomy to the RBI in conducting monetary

What is institutional finance, What is Institutional Finance A natio...

What is Institutional Finance A nation's economic structure comprise a number offinancial institutions, like banks, pension funds, insurance companies, creditunions. These i

Permanent and temporary working capital, Permanent and Temporary Working Ca...

Permanent and Temporary Working Capital, I am looking for assignment help on the topic Permanent and Temporary Working Capital. It would be great if anyone help me.

What is capital rationing, What is capital rationing? Should a firm practic...

What is capital rationing? Should a firm practice capital rationing? Why? Capital rationing is the practice of putting dollar limits on what will be invested in new capital bud

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