Given the following information regarding a replacement decision, what is the relevant cash flow of the...

Transcribed Image Text:

Given the following information regarding a replacement decision, what is the relevant cash flow of the new machine at time 0? Purchase price of new machine: Installation charge: Initial installed cost of old machine: Market value of old machine: Current net book value of old machine: Increase in inventory if new machine is installed: Increase in accounts receivable if new machine is installed: Increase in accounts payable if new machine is installed: Applicable tax rate: Cost of capital: $7,200 1,400 7,000 6,000 4,000 1,000 500 900 30% 15% Given the following information regarding a replacement decision, what is the relevant cash flow of the new machine at time 0? Purchase price of new machine: Installation charge: Initial installed cost of old machine: Market value of old machine: Current net book value of old machine: Increase in inventory if new machine is installed: Increase in accounts receivable if new machine is installed: Increase in accounts payable if new machine is installed: Applicable tax rate: Cost of capital: $7,200 1,400 7,000 6,000 4,000 1,000 500 900 30% 15%

Answer rating: 100% (QA)

To determine the relevant cash flow of the new machine at time 0 we need to calculate the initial ... View the full answer