First year depreciation= 150000*(2/7)=$42857.14
c.
d. We can see that the NPV of the project is $161286 which is greater than zero, and therefore the project should be accepted.
3) Apex Silver Mines is considering whether to buy a new electrolytic refiner. The refiner costs...
3) Apex Silver Mines is considering whether to buy a new electrolytic refiner. The refiner costs $150,000, and will be depreciated using double declining-balance depreciation over its lifetime of seven years. The equipment is expected to generate $75,000 in increased silver production per year, in current dollars, and the company's tax rate is 40%. The company expects that silver prices will increase at an annual rate of 7%, while the general rate of inflation of other goods and services in...
Question 4 (20%) A company is considering launching a new product, below is the after-tax cash flow for the new product project accounting for initial investment, expected sales and the year-by-year inflation rate: Year Expected annual inflation 2 Cash flow in Constant Dollars -$150,000 $33,000 $45,000 $55,000 $45,000 $41,000 3 1.9% 3.0% 2.7% 2.3% 2.1% a) Convert the cash flows from constant dollars (in the value of year 0) into equivalent current dollars with the base year being the present....
please answer them all and mark the answers . thanks A construction company is considering whether to lease or buy equipment for its new 4-year project. If they buy the equipment, it will have an initial investment cost of $630,000 with annual costs of $42.000. At the end of the 4 years the equipment can be sold for an estimated $378,000. For tax purposes, the company will use MACRS-ADS depreciation on the equipment. If they decide to lease, it will...
The Ocean City Water Park is considering the purchase of a new log flume ride. The cost to purchase the equipment is $1,800,000 and it will cost an additional $180,000 to have it installed. The equipment has an expected life of 6 years, and it will be depreciated using a MACRS 5-year class life. Management expects to run about 250 rides per day, with each ride averaging 8 riders. The season will last for 120 days per year. In the...
(New project analysis) The Chung Chemical Corporation is considering the purchase of a chemical analysis machine. Although the machine being considered will result in an increase in earnings before interest and taxes of $36,000 per year, it has a purchase price of $200,000, and it would cost an additional $7,000 to properly install the machine. In addition, to properly operate the machine, inventory must be increased by $8,000. This machine has an expected life of 10 years, after which it...
Raymobile Motors is considering the purchase of a new production machine for $500,000. The purchase of this machine will result in an increase in earnings before interest and taxes of $150,000 per year. To operate this machine properly, workers would have to go through a brief training session that would cost $25,000 after tax. In addition, it would cost $5,000 after tax to install this machine correctly. Also, because this machine is extremely efficient, its purchase would necessitate an increase...
A company is considering whether to buy a new machine, which costs $97,000. The cash flows (adjusted for taxes and depreciation) that would be generated by the new machine are given in the following table: Year Cash flow50, 000 $40,000 $ 25, 000$20,000 (a) Find the total present value of the cash flows. Treat each year's cash flow as a lump sum at the end of the year and use an interest rate of 12.5% per year, compounded annually. Year...
New project analysis Garcia's Truckin' Inc. is considering the purchase of a new production machine for $300,000. The purchase of this machine will result in an increase in earnings before interest and taxes of $40,000 per year. To operate the machine properly, workers would have to go through a brief training session that would cost $7,000 after taxes. It would cost $4,000 to install the machine properly. Also, because this machine is extremely efficient, its purchase would necessitate an...
(New project analysis) Garcia's Truckin' Inc. is considering the purchase of a new production machine for $150,000. The purchase of this machine will result in an increase in earnings before interest and taxes of $40,000 per year. To operate the machine properly, workers would have to go through a brief training session that would cost $5,000 after taxes. It would cost$6,000 to install the machine properly. Also, because this machine is extremely efficient, its purchase would necessitate an increase in...
(New project analysis) Garcia's Truckin' Inc. is considering the purchase of a new production machine for $250,000.The purchase of this machine will result in an increase in earnings before interest and taxes of $60,000 per year. To operate the machine properly, workers would have to go through a brief training session that would cost $3,000 after taxes. It would cost $6,000 to install the machine properly. Also, because this machine is extremelyefficient, its purchase would necessitate an increase in inventory...