cial decision. 2 4. You as the manager of Vertex Company have been asked by your...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
cial decision. 2 4. You as the manager of Vertex Company have been asked by your president to purchase a machine for your production department. A new machine can be purchased for Tk. 5,50,000 with the estimated life of four years, and it would cost another Tk. 50,000 to set up the machine. It is expected that the machine would be sold after four years for Tk. 70,000. The machine will fall into the MACRS three- year class, which is: Y - 33 %, Y2 - 45 %, Y3 - 15 %, and Y4-7%. Use of this machine would require an increase in net working capital of Tk 13,000. The machine would have no effect on revenues, but it is expected to save the firm Tk 2,25,000 per year in before tax operating costs. The firm marginal tax rate is 34 %. i) If the new machine is purchased, what is the amount of the initial investment outlay at year Yo? ii) Determine the incremental operating cash flows for years I through year 4. iii) What is the terminal cash flow at the end of year 4? 8 cial decision. 2 4. You as the manager of Vertex Company have been asked by your president to purchase a machine for your production department. A new machine can be purchased for Tk. 5,50,000 with the estimated life of four years, and it would cost another Tk. 50,000 to set up the machine. It is expected that the machine would be sold after four years for Tk. 70,000. The machine will fall into the MACRS three- year class, which is: Y - 33 %, Y2 - 45 %, Y3 - 15 %, and Y4-7%. Use of this machine would require an increase in net working capital of Tk 13,000. The machine would have no effect on revenues, but it is expected to save the firm Tk 2,25,000 per year in before tax operating costs. The firm marginal tax rate is 34 %. i) If the new machine is purchased, what is the amount of the initial investment outlay at year Yo? ii) Determine the incremental operating cash flows for years I through year 4. iii) What is the terminal cash flow at the end of year 4? 8
Expert Answer:
Answer rating: 100% (QA)
i Initial investment outlay at year 0 Cost of machine ... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $946,687. The fixed asset will be depreciated straight-line to 65,678 over its...
-
You have been asked by the president of your company to evaluate the proposed acquisition of a new spectrometer for the firms R&D department. The equipments basic price is $70,000, and it would cost...
-
The Ford Construction Company is considering acquiring a new earthmover. The mover's basic price is $90,000, and it will cost another $18,000 to modify it for special use by the company. This...
-
You are attempting to arrive at what the monthly rate of change that has recently occurred in the real estate market. In doing some market research, you find two properties that have sold twice...
-
Graph the ATC curves for Plant 1 and Plant 2. Explain why these ATC curves differ. The table shows the production function of Bonnie's Balloon Rides. Bonnie's pays $500 a day for each balloon it...
-
In considering the case above, where does Valley Medical Center have strengths? Where do they have challenges?
-
Santa's Attic.com is an online retailer/manufacturer of children's toys. Its main competitors are larger EC toy companies including Amazon.com; Yahoo Shopping, which includes ToysRUs.com and...
-
Marcellus Jackson, the CFO of Mac, Inc., notices that the tax liability reported on Macs tax return is less than the tax expense reported on Macs financial statements. Provide a letter to Jackson...
-
Consider the following set of test scores for a history class: 100, 45, 60, 60, 50, 50, 45, 95, 60, 55, 40 The value of the mean for this data set would be digite sua resposta... (Input only a...
-
West Plains Clinic is evaluating a project that costs $250,000 and has expected net cash inflows of $40,000 per year for eight years. The first inflow occurs one year after the cost outflow, and the...
-
Below is a bar graph that shows the advertising expenses of three different types of media; Print, Television and Social Media, for each year from Year 1 to Year 3. Expenses (Rs. Crores) 4500 4000...
-
A stunt man drives a car at a speed of 20 m/s off a 34-m-high cliff. The road leading to the cliff is inclined upward at an angle of 20. How far from the base of the cliff does the car land? Express...
-
a bearish market: 1. What is a bear market and how does it differ from a bull market? 2. What are the key indicators of a bearish market? 3. How can investors protect their investments during a...
-
what extent does technology, such as artificial intelligence and automation, impact the dynamics of change management, and what measures should organizations take to ensure successful integration...
-
A soccer player kicks a rock horizontally off a 45.0-m-high cliff into a pool of water. If the player hears the sound of the splash 3.23 s later, what was the initial speed given to the rock? Assume...
-
You are working as a Quality Consultant in an organisation of your choice. Your brief is to evaluate the effectiveness of the Operations and Quality Management in the company giving your own...
-
Periwinkle Company is a multinational organization. Its Parts Division is located in Lavender Land, while its Assembly Division is located in North Orchid. During the current year Periwinkle Companys...
-
Joe Vida owns the Peace Barber simple . He employs five barbers and pays each a base rate of $1,200 per month. One of the barbers serves as the manage) and receives an extra $600 per month. In...
-
Suppose you are considering an investment that grew by 32 percent across a five-year holding period. If you wanted to state this rate of return as an effective annual rate (that is, with annual...
-
Tyson Company bottles and distributes NO-KAL, a diet soft drink. The beverage is sold for 40 cents per 16-ounce bottle to retailers, who charge customers Instructions (a) Prepare a CVP income...
Study smarter with the SolutionInn App