28. The Rotograf has approved a project 5 years ago and the project still has 10...
28. The Rotograf has approved a project 5 years ago and the project still has 10 years of remaining life today. If the old equipment is replaced with the new equipment, the Operating Expenses will decrease by $9 million, since the new equipment is energy-efficient. The old equipment was purchased 5 years ago at a cost of $37 million and was assumed to have no value at the end of its 15-year life. The old equipment can be sold for $17 million today. The new equipment is $48 million and was assumed to have no value at the end of the project. The firm uses straight-line depreciation. The marginal tax rate is 40%. If the firm replaces the old equipment now, free cash flows for the next year will
| increase by $6.33 million |
| decrease by $6.71 million |
| increase by $6.84 million |
| increase by $6.14 million |
| decrease by $5.70 million |
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28. The Rotograf has approved a project 5 years ago and the
project still has 10...
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