Question: please answer in excel format 5. The ZZZ Company is considering investing in a new machine for one of its factories. The company has two

 please answer in excel format 5. The ZZZ Company is considering

please answer in excel format

5. The ZZZ Company is considering investing in a new machine for one of its factories. The company has two alternatives to choose from: The life span of each machine is 5 years. ZZZ sells each unit for a price of $6. The company has a cost of capital of 12% and its tax rate is 35%. a. If the company manufactures 1 million units per year, which machine should it buy? (Machine A) b. Plot a graph showing the profitability of investment in each machine type depending on the annual production. (Hint: you might want to use the Data Table functionality to examine how sensitive the NPV is to the annual production.) Machine B $10,000,000 Cost Annual fixed cost per machine Variable cost per unit Annual production Machine A $4,000,000 $300,000 $1.20 $210,000 $0.80 400,000 550,000

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!