The Hamilton Company is using an automated bench lathe that cost $ 150,000 five years ago....
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The Hamilton Company is using an automated bench lathe that cost $ 150,000 five years ago. Its current market value is only $20,000. The old lathe hed been straight line depreciated over a ten year life to zero salvage Management can purchase the new machine at a cost of $110,000. The new machine will be depreciated over a 5 year life to zero salvage value. Expected savings from the new. machine are $ 9000 a year (before taxes) and the cost of capital is 12 %.Assume a 46 % tax rate a What is the initial investment if the old machine is replaced? b.Find the intermediate cash flows - Calculate NPV of the project. d.Should the old machine be replaced? The Hamilton Company is using an automated bench lathe that cost $ 150,000 five years ago. Its current market value is only $20,000. The old lathe hed been straight line depreciated over a ten year life to zero salvage Management can purchase the new machine at a cost of $110,000. The new machine will be depreciated over a 5 year life to zero salvage value. Expected savings from the new. machine are $ 9000 a year (before taxes) and the cost of capital is 12 %.Assume a 46 % tax rate a What is the initial investment if the old machine is replaced? b.Find the intermediate cash flows - Calculate NPV of the project. d.Should the old machine be replaced?
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a Initial investment if old machine is replaced 110000 cost of ne... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
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