Finance
A university student painter is considering the purchase of a new air compressor and paint gun to replace an old paint sprayer. (Both items belong to Class 9 and have a 25% CCA rate.) These two new items cost $12,600 and have a useful life of four years, at which time they can be sold for $2,200. The old paint sprayer can be sold now for $560 and could be scrapped for $310 in four years. The entrepreneurial student believes that operating revenues will increase annually by $8,600. The tax rate is 22% and the required rate of return is 15%. What is the NPV of the new equipment? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV Should the purchase be made? Yes Ο Νο
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A university student painter is considering the purchase of a new air compressor and paint gun...
A university student painter is considering the purchase of a new air compressor and paint gun to replace an old paint sprayer. (Both items belong to Class 9 and have a 25 percent CCA rate.) These two new items cost $12,000 and have a useful life of four years, at which time they can be sold for $1,600. The old paint sprayer can be sold now for $500 and could be scrapped for $250 in four years. The entrepreneurial student...
8. A university student painter is considering the purchase of a new air compressor and paint...
8. A university student painter is considering the purchase of a new air compressor and paint gun to replace an old paint sprayer. Suppose the CCA rates are 20% and ent, respectively. The two new items cost $8,500 and have a useful life of four years, at which time they can be sold for $1,100. The old paint sprayer can be sold now for $275 and be scraped for $150 in four years. The student is very confident that operating...
Finance
Your company is considering the purchase of a fleet of cars for $200,000. It can borrow at 11%. The cars will be used for four years. At the end of four years they will be worthless. You call a leasing agent and find that the cars can be leased for $55,000 per year. The corporate tax rate is 40% and the cars belong in CCA class 10 (a 30% class), what is the net advantage to leasing?Select one:a. $7,771b. $16,217c....
Problem 2 EM Industries is considering a new project involving the acquisition of a new machine...
Problem 2 EM Industries is considering a new project involving the acquisition of a new machine that would replace an older machine currently in use. The new machine costs $750,000 (at t-0) and can be sold at the end of its expected 4-year operating life for $100,000 (at t-4). The new machine takes up more space and EM will need to move maintenance and cleaning supplies that used to be stored next to the machine to a small storage room...
Finance
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $940,000, and it would cost another $22,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $582,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $12,500. The sprayer would not change revenues, but...
Suppose we are thinking about renovating a leased office. The renovations would cost $364,000. The renovations...
Suppose we are thinking about renovating a leased office. The renovations would cost $364,000. The renovations will be depreciated straight-line to zero over the five-year remainder of the lease. The new office would save us $36,000 per year in heating and cooling costs. Also, absenteeism should be reduced and the new image should increase revenues. These last two items would result in increased operating revenues of $43,000 annually. The tax rate is 36%, and the discount rate is 13%. Calculate...
Corporate Finance
The company is considering investing in a new $ 8 million machine to replace the existing engine. Now the machine has a book value of $ 16 million and a market value of $ 14.5 million. The new engine is expected to have a life of four years, and the old engine has four years remaining in which it can be used. If the company replaces the old machine with a new one, they hope to save $ 16.7 million...
Judson Industries is considering a new project. The project will initially require $749,000 for n...
Judson Industries is considering a new project. The project will initially require $749,000 for new fixed assets, $238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable is expected to increase by $70,001. The fixed assets will belong in a 30% CCA class. At the end of the project, in four years' time, the fixed assets can be sold for 40% of their original cost. The net working capital will return to its original level at the end...
New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line....
New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $830,000, and it would cost another $21,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $555,000. The machine would require an increase in net working capital (inventory) of $18,500. The sprayer would not change revenues, but...
A firm is considering an investment in a new machine with a price of $18.12 million...
A firm is considering an investment in a new machine with a price of $18.12 million to replace its existing machine. The current machine has a book value of $6.12 million and a market value of $4.62 million. The new machine is expected to have a four-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $6.82 million in...
8. A university student painter is considering the purchase of a new air compressor and paint gun to replace an old paint sprayer. Suppose the CCA rates are 20% and ent, respectively. The two new items cost $8,500 and have a useful life of four years, at which time they can be sold for $1,100. The old paint sprayer can be sold now for $275 and be scraped for $150 in four years. The student is very confident that operating...
Problem 2 EM Industries is considering a new project involving the acquisition of a new machine that would replace an older machine currently in use. The new machine costs $750,000 (at t-0) and can be sold at the end of its expected 4-year operating life for $100,000 (at t-4). The new machine takes up more space and EM will need to move maintenance and cleaning supplies that used to be stored next to the machine to a small storage room...
Suppose we are thinking about renovating a leased office. The renovations would cost $364,000. The renovations will be depreciated straight-line to zero over the five-year remainder of the lease. The new office would save us $36,000 per year in heating and cooling costs. Also, absenteeism should be reduced and the new image should increase revenues. These last two items would result in increased operating revenues of $43,000 annually. The tax rate is 36%, and the discount rate is 13%. Calculate...
Judson Industries is considering a new project. The project will initially require $749,000 for new fixed assets, $238,000 for additional inventory, and $25,000 for additional accounts receivable. Accounts payable is expected to increase by $70,001. The fixed assets will belong in a 30% CCA class. At the end of the project, in four years' time, the fixed assets can be sold for 40% of their original cost. The net working capital will return to its original level at the end...
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