Homework Answers
Calculation of NPV:
|
0 |
1 |
2 |
3 |
4 |
|
|
Acquisition Cost |
-40,300 |
||||
|
Investment in Working Capital |
-3,000 |
||||
|
Recovery of Working Capital |
3,000 |
||||
|
Salvage Value of Old Machinery |
930 |
||||
|
Salvage Value of New Machinery |
2,130 |
||||
|
Annual Operating Cash Savings |
13,150 |
13,150 |
13,150 |
13,150 |
|
|
Total Cash Flow |
-42,370 |
13,150 |
13,150 |
13,150 |
18,280 |
|
Discount Factor @10% |
1 |
0.909 |
0.826 |
0.751 |
0.683 |
|
Present Value |
-42,370 |
11,953.35 |
10,861.9 |
9,875.65 |
12,485.24 |
|
Net Present Value |
2,806.14 |
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The supervisor of the county Department of Transportation (DOT) is considering the replacement of some machinery. This machinery has zero book value but its current market value is $930. One possible alternative is to invest in new machinery, which has a cost of $40,300. This new machinery would produce estimated annual operating cash savings of $13,150. The estimated useful life of the new machinery is four years. The DOT uses straight-line depreciation. The new machinery has an estimated salvage value...
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The supervisor of the
county Department of Transportation (DOT) is considering the
replacement of some machinery. This machinery has zero book value
but its current market value is $830. One possible alternative is
to invest in new machinery, which has a cost of $39,300. This new
machinery would produce estimated annual operating cash savings of
$12,650. The estimated useful life of the new machinery is four
years. The DOT uses straight-line depreciation. The new machinery
has an estimated salvage value...
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but its current market value is $830. One possible alternative is
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machinery would produce estimated annual operating cash savings of
$12,650. The estimated useful life of the new machinery is four
years. The DOT uses straight-line depreciation. The new machinery
has an estimated salvage value...
I am checking to see if I missing anything in this
problem? Thank you!
The supervisor of the county Department of Transportation (DOT) is considering the replacement of some machinery. This machinery has zero book value but its current market value is $960. One possible alternative is to invest in new machinery, which has a cost of $40,600. This new machinery would produce estimated annual operating cash savings of $13,300. The estimated useful life of the new machinery is four...
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