Spend 8000 on a new machine You think it will provide after tax cash inflows of 3500 per year for the next three years The cost of funds is 8 Let the machine in number one be Machine A An alternative is Machine B It costs 8000 and will provide after tax cash inflows of 5000 per year for 2 years It has the same risk as A Should you buy A or B The professor stated I would use a replacement chain for 6 years and I am not sure why it's 6 years Is it because we have to bring the last year back to zero Overall, I am not understanding question 2 at all I can solve and get the correct answers for number 1

The Answer is in the image, click to view ...

Question: Spend 8000 on a new machine. You think it will provide after tax cash inflows of 3500 per year for the next three years. The

Spend 8000 on a new machine. You think it will provide after tax cash inflows of 3500 per year for the next three years. The cost of funds is 8%.
Let the machine in number one be Machine A. An alternative is Machine B. It costs 8000 and will provide after tax cash inflows of 5000 per year for 2 years. It has the same risk as A. Should you buy A or B?

The professor stated I would use a replacement chain for 6 years and I am not sure why it's 6 years. Is it because we have to bring the last year back to zero? Overall, I am not understanding question 2 at all. I can solve and get the correct answers for number 1.

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!

You have the chance to invest your money in either a 7.5% bond that sells at face value or an aggressive growth stock that pays only 1% dividend. If inflation occurs, the interest rate will go up to...

Please help with the attached Finance problems. Please show all formulas used and all steps and work to solve the problems. Module Three Practice 1. Spend 8000 on a new machine. You think it will...

1. Spend 8000 on a new machine. You think it will provide after tax cash inflows of 3500 per year for the next three years. The cost of funds is 8%. Find the NPV, IRR, and MIRR. Should you buy it?...

PLEASE HELP. MODULE THREE PRACTICE. ! Spend 8000 on a new machine. You think it will provide after tax cash inflows of 3500 per year for the next three years. The cost of funds is 8%. Find the NPV,...

Spend 8000 on a new machine. You think it will provide after tax cash inflows of 3500 per year for the next three years. The cost of funds is 8%. Find the NPV, IRR, and MIRR. Should you buy it? Let...

Can someone help me solve problem two step by step? You need the #'s from problem one so that's why I posted them both below. 1. Spend 8000 on a new machine. You think it will provide after tax cash...

I need help finding MIRR, I pasted all of my work up until then. Spend 8000 on a new machine. You think it will provide after tax cash inflows of 3500 per year for the next three years. The cost of...

Need an explanation as to WHY the answer is "yes we should buy it". Spend 8000 on a new machine. You think it will provide after tax cash inflows of 3500 per year for the next three years. The cost...

Spend 8000 on a new machine. You think it will provide after tax cash inflows of 3500 per year for the next three years. The cost of funds is 8%. Find the NPV, IRR, and MIRR. Should you buy it?

82 Basic terminology A firm is considering the following three separate situations. Situation A Build either a small office building or a convenience store on a parcel of land located in a...

Robbinsdale, Inc. is a reseller of stone ornaments. The company sold 7,000 units during the year. The company provided the following information: Sales Revenue $587,000 Purchases (excluding freight)...

On September 15, 2014, Hill-Nielson Corporation purchased 7,000 shares of Community Communications Company for $32 per share. The following information applies to the stock price of Community...

As a board member, can you immediately involve the top management of the corporation in your actions,whatever they may be ?

On April 3, 2015, Luis filed his 2014 income tax return, which showed a tax due of $75,000. On June 1, 2017, he filed an amended return for 2014 that showed an additional tax of $10,000. Luis paid...

The Eggers Corporation filed an amended Form 1120, claiming an additional $400,000 deduction for payments to a contractor for a prior tax year. The amended return was based on the entity's...

On March 1, 2012, McCullough Company purchased for $300,000 a tract of land on which was located a fully equipped factory. The following information was compiled regarding this purchase: Required: 1....

Maureen, a calendar year individual taxpayer, files her 2014 return on November 4, 2016. She did not obtain an extension for filing her return, and the return reflects additional income tax due of...

The company wants to maintain monthly ending inventories of plastic equal to 25% of the following month's budgeted product on needs. The cost of plastic is $2.20 per pound. Preface a direct materials...

Tori and some other childeen experimented with balls to see which ones rolled. First using a piece of cardboard to use as a ramp, they angled it on a block to the floor to test the balls. Then Tori...

The amount of slack in activity D is: (a) no days. b) one day. c) two days. d) three days.

Encosta Memories is a small family photography business. The business has a good reputation for high-quality photos and enjoys long-standing arrangements with many schools for the provision of school...

The data contained in table 14.4 refer to a project that contains 13 activities. Based on the details of the activity, precedent activities and time estimates you Activity TB=l G required to:...