Question: PLEASE SOLVE USING BA II FINANCE CALCULATOR! Will Rate all Answers! 8. Given the following information regarding a replacement decision, what is the relevant cash

 PLEASE SOLVE USING BA II FINANCE CALCULATOR! Will Rate all Answers!

PLEASE SOLVE USING BA II FINANCE CALCULATOR! Will Rate all Answers!

8. 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: $7,200 Installation charge: 1.400 Initial installed cost of old machine: 7000 Market value of old machine: 6.000 Current net book value of old machine: 4.000 Increase in inventory if new machine is installed: 1000 Increase in accounts receivable if new machine is installed: 500 Increase in accounts payable if new machine is installed: 900 Applicable tax rate: 30% Cost of capital: 15% 9. Consider a project in which a new machine's installed cost is $100,000. Net working capital will increase by $50,000 at the beginning of the project's life and decrease by $50,000 at the end of the project's life. After-tax net salvage value would be $5,000. Projected after-tax operating cash flows are $30,000 per year throughout the project's 4- year life. If the cost of capital is 14%, what is this project's NPV? Would the NPV decision rule tell you to accept or reject the project

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!