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 $110,000You have learned...

50.1K

Verified Solution

Question

Finance

One year ago, your company purchased a machine used in manufacturing for $110,000You 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 30\% ; 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 $40,000 per year for the next 10 years. The current machine is expected to produce EBITDA of $21,000 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 38%, and the opportunity cost of capital for this type of equipment is 12%.
What is the NPV of replacement?
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: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

The break-even point tells a company the number of units or the amount of revenue that...

Programming
1.2K views

Latest version of CSS. What is the browser requirement to view the latest version of CSS implemented...

Psychology
1.2K views

As you consider attitudes and the three elements of affect, cognition and behavior, does the nature...

Mechanical Engineering
1.2K views

The gas phase reaction: 2A+B = 3C , is carried out in an isothermal packed bed...

Physics
1.2K views

Josh has just raised a 2.5 kg bucket of water using a well 's winch when...

Physics
1.2K views

in momentum F 1 3 of the following graphs the total change is zero 5...

Calculus
1.2K views

Find fx and fy.f(x,y) = -8e^7x-2yfx(x,y) =fy(x,y) =

Accounting
1.2K views

Redfern Audio produces audio equipment including headphones. At the Campus Facility, it produces...

Accounting
1.2K views

E7-7(Static) Analyzing Make-or-Buy Decision [LO 7-2,7-4] MSI is considering outsourcing the production of the...

Accounting
1.2K views

one of the most important changes regarding pass through entities as a result of TCJA...

Accounting
1.2K views

1) Kylie is an Accountant employed by Number One Pty Ltd. During the FBT year...

Finance
1.2K views

How would an increase in the interest rate (r) or a decrease in the holding...