Question

Nikky Co. is considering replacing an old machine with a new one. The old one was purchased 3 years ago for $200,000. It is depreciated straight-line to zero over its 10-year life. It is expected to be worth of 85,000 three years later. If Nikky sells it today, Nikky should receive $150,000 for the old machine. The new machine costs $300,000. It has a life of 5 years and will be depreciated straight-line to zero over its 5-year life. It is expected to be worth $110,000 at the end of 3 years. The new machine is expected to reduce the operating costs by $100,000 in the first year. The cost savings will increase by 5% each year. There is no change in net working capital. The discount rate of this replacement project is 15%, and the tax rate is 35%.  Should the company replace the old machine?

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Answer 1

cost neln machine A6,500 on sai net cal 3,500 role 、 CCost de vodine is +0,000 00,0c0 0,000 0,000 calculaha 3 00110,950 ем

42,250 44,662 +0,000 85,662 4-0,000 ceshs a 424,0083, 250 ,62 calculohou old in Crethental Depredican clos do clos る 1, ,co at le end o-pected be 86,000 85,000 80000 5,000. et et on sale - ,00/ ?50

vdeanval 0,000 tax S0,250 , 13,500- 83,250 skp田 calculand ekset fvesed valea 68,65 0.86 9,000 ·756 82, 250 86, 662 36, 260 G2 ,18 56,366 9, 105 o. 668 2 Shepoj discankd cal 53ノ603

-Since plreke decision ives ve p then old hoc