The WuShock Company is considering the purchase of a new machine to replace an obsolete...
60.1K
Verified Solution
Link Copied!
Question
Finance
The WuShock Company is considering the purchase of a new machine to replace an obsolete one. The machine being used for the operation has a book value and a market value of zero. However, the machine is in good working order and will last at least another 5 years. The proposed replacement machine will perform the operation so much more efficiently that WuShock's engineers estimate that it will produce an increase in aftertax cash flows (labor savings and depreciation) of $6000 per year, and will not have an effect on net working capital. The new machine will cost $22,500 delivered and installed, and its economic and depreciation life is estimated to be 5 years. It has zero salvage value. The firm's WACC is 8%, and its marginal tax rate is 15% What is the NPV of this replacement project? Round your answer to full dollars. a. $23,956 b. $2,317 C. $1,456 d. $20,363
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!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.