Question: You are evaluating two different silicon wafer milling machines The
You are evaluating two different silicon wafer milling machines. The Techron I costs $450,000, has a three-year life, and has pretax operating costs of $85,000 per year. The Techron II costs $580,000, has a five-year life, and has pretax operating costs of $91,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $76,000. If your tax rate is 35 percent and your discount rate is 14 percent, compute the EAC for both machines. Which do you prefer? Why?
Answer to relevant QuestionsYasmin Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $475,000 is estimated to result in $183,000 in annual pretax cost savings. The press falls in the ...Sparkling Water, Inc., expects to sell 5 million bottles of drinking water each year in perpetuity. This year, each bottle will sell for $1.10 in real terms and will cost $0.89 in real terms. Sales income and costs occur at ...A firm is considering an investment in a new machine with a price of $11.5 million to replace its existing machine. The current machine has a book value of $3 million, and a market value of $5.2 million. The new machine is ...Aria Acoustics, Inc., (AAI), projects unit sales for a new 7-octave voice emulation implant as follows: Production of the implants will require $1,500,000 in net working capital to start and additional net working capital ...J. Smythe, Inc., manufactures fine furniture. The company is deciding whether to introduce a new mahogany dining room table set. The set will sell for $6,500, including a set of eight chairs. The company feels that sales ...
Post your question