Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. one year ago, your company purchased a machine use

One year ago, your company purchased a machine used in manufacturing for $115,000. You have...

90.2K

Verified Solution

Question

Finance

One year ago, your company purchased a machine used in manufacturing for

$115,000.

You have learned that a new machine is available that offers many advantages and that you can purchase it for

$170,000

today. The CCA rate applicable to both machines is

40%;

neither machine will have any long-term salvage value. You expect that the new machine will produce earnings before interest, taxes, depreciation, and amortization (EBITDA) of

$50,000

per year for the next 10 years. The current machine is expected to produce EBITDA of

$25,000

per year. All other expenses of the two machines are identical. The market value today of the current machine is

$50,000.

Your company's tax rate is

40%,

and the opportunity cost of capital for this type of equipment is

12%.

Should your company replace its year-old machine?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

1 8 Determine angles a b and c Figure P1 8 35 a b C

Basic Math
Q

Describe the most commonly used histological processes from specimen collection to H & E staining. About 1000...

Biology
Q

Are America's top chief executive officers (CEOs) really worth all that money? One way to answer...

Statistics
Q

The property of water that is most responsible for prevention of a rapid rise in...

Biology
Q

Peter has half of his investments in stock paying a 9% dividend and the other...

Basic Math
Q

Determine if Assumptions are satisfied A marketing research company is estimating which of two soft...

Statistics
Q

In the sequence below what term is the number 73 5 9 13 n Type...

Algebra
Q

MANAGIAL METRTIN Quick Check Suppose that the investment in the attachment for the X-ray...

Accounting
Q

CenterWare is a manufacturer of large flower pots for urban settings. The company has these...

Accounting
Q

An audit revealed that in determining these amounts, the ending inventory for 2017 was overstated...

Accounting
Q

QUESTION 1 (20) Use the following data to calculate the requested rabos for Vereeniging Status...

Finance
Q

Which of the following factors determines the amount an insurance company will pay for replacement...

Finance