St . Johns River Shipyards is considering the replacement of an 8 - year - old riveting
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Question:
St Johns River Shipyards is considering the replacement of an yearold riveting machine with a new one that will increase earnings before depreciation from $ to $ per year. The new machine will cost $ and it will have an estimated life of years and no salvage value. The new riveting machine is eligible for bonus depreciation at the time of purchase. The applicable corporate tax rate is and the firm's WACC is The old machine has been fully depreciated and has no salvage value.
What is the NPV of the project? Negative value, if any, should be indicated by a minus sign. Round your answer to the nearest cent.
$
Should the old riveting machine be replaced by the new one?
Yes
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