Solution:
Computation of NPV - Replacement proposal of Equipment - X Company | ||||
Particulars | Period | Amount | PV Factor | Present Value |
Cash Outflows: | ||||
Cost of new Equipment | 0 | $75,000 | 1 | $75,000 |
Sale value of old equipment | 0 | -$7,000 | 1 | -$7,000 |
Present value of cash outflows (A) | $68,000 | |||
Cash Inflows: | ||||
Annual cost savings | 1-6 | $20,000 | 5.242 | $104,840 |
Difference in Salvage value of old and new machine | 6 | $3,000 | 0.790 | $2,370 |
Present value of cash Inflows (B) | $107,210 | |||
NPV (B-A) | $39,210 |
X Company is considering replacing one of its machines in order to save operating costs. Operating...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $70,000 per year; operating costs with the new machine are expected to be $47,000 per year. The new machine will cost $65,000 and will last for six years, at which time it can be sold for $3,000. The current machine will also last for six more years but will not be worth anything at that time. It cost...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $61,000 per year; operating costs with the new machine are expected to be $43,000 per year. The new machine will cost $72,000 and will last for six years, at which time it can be sold for $2,500. The current machine will also last for six more years but will not be worth anything at that time. It cost...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $61,000 per year; operating costs with the new machine are expected to be $42,000 per year. The new machine will cost $72,000 and will last for six years, at which time it can be sold for $1,500. The current machine will also last for six more years but will not be worth anything at that time. It cost...
Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $68,000 per year; operating costs with the new machine are expected to be $42,000 per year. The new machine will cost $72,000 and will last for six years, at which time it can be sold for $1,000. The current machine will also last for six more years but will not be worth anything at that time. It cost $33,000...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $60,000 per year; operating costs with the new machine are expected to be $50,000 per year. The new machine will cost $68,000 and will last for six years, at which time it can be sold for $2,000. The current machine will also last for six more years but will not be worth anything at that time. It cost...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $60,000 per year; operating costs with the new machine are expected to be $43,000 per year. The new machine will cost $72,000 and will last for six years, at which time it can be sold for $2,500. The current machine will also last for six more years but will not be worth anything at that time. It cost...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $67,000 per year; operating costs with the new machine are expected to be $45,000 per year. The new machine will cost $ 70,000 and will last for four years, at which time it can be sold for $3,000. The current machine will also last for four more years but will not be worth anything at that time. It...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $64,000 per year; operating costs with the new machine are expected to be $47,000 per year. The new machine will cost $69,000 and will last for four years, at which time it can be sold for $1,000. The current machine will also last for four more years but will not be worth anything at that time. It cost...
LOP X Company is considering replacing one of its machines in order to save operating costs of its machines in order to save operating costs. Operating costs with the current machine are $61,000 per year; operating costs with the new machine will cost $65,000 and will last for six years, at why ,000 per year; operating costs with the new machine are expected to be $43,000 per year. The new cost $65,000 and will last for six years at which...
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $60,000 per year; operating costs with the new machine are expected to be $43,000 per year. The new machine will cost $72,000 and will last for six years, at which time it can be sold for $2,500. The current machine will also last for six more years but will not be worth anything at that time. It cost...