(Time allowance: 15 minutes) You are considering replacing an existing cold) machine with a new machine: either machine A or machine B. Machine A has an 5 year life, and an NPV of -$39,640; while machine B has a 10 year life and an NPV of -$54.940. The old machine can be sold (market value) today for $4,000. The old machine is depreciated down to zero using straight line, the annual depreciation is $2,000 and the remaining book value today for the old machine is 56,000. If you decide to postpone, the annual pre-tax maintenance and operations expenses are $8,000. In addition, if the old machine is replaced next year instead of today, it could be sold for $3,000 then (market value in year 1). The tax rate is 25%. The discounting rate is 10% In answering the questions that are answers in dollars, enter your answer en millions of dollars and use/round to two decimals, and do not use the dollar (S) sign. For example if your answer is $12,500,340 then enter 12.50; if answer is $537.459 then enter 0.54: if the answer is $40,000,000 then enter 40,00 1. Which of the two new machines should be selected to replace the existing machine? Simply enter either the letter A for machine A or the letter B for machine B. A/ 2. Which of the following is the reason on which the correct decision should be made? A. The NPV is higher B. The NPV is lower C. The lowest cost as reflected in a higher EAC D. The lowest cost as reflected in the lowest EAC Enter just the letter (Capitalized) of the statement you are choosing. Activate Windows Go to Settings to activate Computing cash flows for Replacement later alternative 2 3 3. What is the cash flows today for the alternative for replacement later? Enter a negative number if the cash flow is an outflow and a positive number if it is an inflow. Use comma for thousands and do not enter decimals (only integers). A 4.What is the cash flows in year 1 for the alternative for replacement later? Enter a negative number if the cash flow is an outflow and a positive number if it is an inflow. Use comma for thousands and do not enter decimals (only integers). A/ Computing cash flows for Replacement now alternative 5. What is the cash flows today for the alternative for replacement now? Enter a negative number if the cash flow is an outflow and a positive number if it is an inflow. Use comma for thousands and do not enter decimals (only integers). A 6. What is the cash flows in year 1 for the alternative for replacement now? Enter a negative number if the cash flow is an outflow and a positive number if it is an inflow. Use comma for thousands and do not enter decimals (only integers). A 7. What is the decision? Replace now or later? Enter either the word now or the word later (lower case) A/ (Time allowance: 15 minutes) You are considering replacing an existing cold) machine with a new machine: either machine A or machine B. Machine A has an 5 year life, and an NPV of -$39,640; while machine B has a 10 year life and an NPV of -$54.940. The old machine can be sold (market value) today for $4,000. The old machine is depreciated down to zero using straight line, the annual depreciation is $2,000 and the remaining book value today for the old machine is 56,000. If you decide to postpone, the annual pre-tax maintenance and operations expenses are $8,000. In addition, if the old machine is replaced next year instead of today, it could be sold for $3,000 then (market value in year 1). The tax rate is 25%. The discounting rate is 10% In answering the questions that are answers in dollars, enter your answer en millions of dollars and use/round to two decimals, and do not use the dollar (S) sign. For example if your answer is $12,500,340 then enter 12.50; if answer is $537.459 then enter 0.54: if the answer is $40,000,000 then enter 40,00 1. Which of the two new machines should be selected to replace the existing machine? Simply enter either the letter A for machine A or the letter B for machine B. A/ 2. Which of the following is the reason on which the correct decision should be made? A. The NPV is higher B. The NPV is lower C. The lowest cost as reflected in a higher EAC D. The lowest cost as reflected in the lowest EAC Enter just the letter (Capitalized) of the statement you are choosing. Activate Windows Go to Settings to activate Computing cash flows for Replacement later alternative 2 3 3. What is the cash flows today for the alternative for replacement later? Enter a negative number if the cash flow is an outflow and a positive number if it is an inflow. Use comma for thousands and do not enter decimals (only integers). A 4.What is the cash flows in year 1 for the alternative for replacement later? Enter a negative number if the cash flow is an outflow and a positive number if it is an inflow. Use comma for thousands and do not enter decimals (only integers). A/ Computing cash flows for Replacement now alternative 5. What is the cash flows today for the alternative for replacement now? Enter a negative number if the cash flow is an outflow and a positive number if it is an inflow. Use comma for thousands and do not enter decimals (only integers). A 6. What is the cash flows in year 1 for the alternative for replacement now? Enter a negative number if the cash flow is an outflow and a positive number if it is an inflow. Use comma for thousands and do not enter decimals (only integers). A 7. What is the decision? Replace now or later? Enter either the word now or the word later (lower case) A/