Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. t-shirt by design is considering the purchase of a

T-Shirt By Design is considering the purchase of a new printing press to be used...

90.2K

Verified Solution

Question

Finance

T-Shirt By Design is considering the purchase of a new printing press to be used over the next three years. The press has a base price of $900,000. The machine has a fi ve year useful life and the firm plans to depreciate the machine using straight line depreciation over the useful life. The press would require an increase in working capital (mainly t-shirts) of $16,000. The press is expected to save the firm 400,000 in before tax operating costs each year and T-Shirt By Design's tax rate and WACC are 35% and 12%, respectively. If T-Shirt By Design plans to sell the machine at the end of the project (i.e. end of year three), at what price must they sell the machine to make them willing to pursue the project? That is, what is the break-even sale price of the equipment?

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

Geometry
1.2K views

Directions Find each measure using the information given 4 P is the incenter of AJKL...

Statistics
1.2K views

(a) The rent prices for a studio apartment in Dublin follows a normal distribution with mean...

Statistics
1.2K views

You wish to test the following claim (Ha) at a significance level of α=0.002.       Ho:μ1=μ2 Ha:μ1<μ2 You believe...

Medical Sciences
1.2K views

What is spermatogenesis? In what specific structure does this occur? What is oogenesis? What is another...

Programming
1.2K views

Assume that 40% of a program is parallelizable. In 15% of the parallel portion, 200x speed...

Physics
1.2K views

Charges of the amount 45 nC/m (charge per length) are deposited at the surface of a...

General Management
1.2K views

The industry that I would like you to focus on this semester for your operations strategy...

Basic Math
1.2K views

Paul purchased a $2450 bond paying 3.5% annual simple interest after graduating from college. It...

Calculus
1.2K views

Find an equation of the tangent plane to the surface z = ln(x - 2y)...

Accounting
1.2K views

Un Company sold office equipment with a cost of $42,310 and accumulated depreciation of $38,633...

Accounting
1.2K views

Handy Home sells windows and doors in the ratio of 8:2 (windows:doors). The selling price...

Finance
1.2K views

Consider a vanilla interest rate swap based on 180-day LIBOR with a notional of $10...