Question: Use the following information to answer Multiple Choice Problems 16 to 24 Presto Pizza is considering replacing one of its pizza ovens with a new

 Use the following information to answer Multiple Choice Problems 16 to24 Presto Pizza is considering replacing one of its pizza ovens witha new model that would increase capacity and reduce operating costs compared

Use the following information to answer Multiple Choice Problems 16 to 24 Presto Pizza is considering replacing one of its pizza ovens with a new model that would increase capacity and reduce operating costs compared to the old ovens. The new oven costs S50,000 today (att-0) and can be sold in 5 years for $10,000 (at t = 5). The old oven can be sold today for $5,000 and has a zero ($0) residual salvage in 5 years. Independent Consultants estimate that Presto Pizza's annual sales less operating expenses (not including taxes, depreciation, or adjustments for net working capital) will increase from currently $50,000/year to $75,000/year (at t= l to t = 5). They also estimate that net working capital will increase by $10,000 today (at t-0) to meet increased sales and will be recaptured completely at the end of year 5 (at t-5). The pizza oven belongs to asset class 43 with a CCA rate of 30%. Assume that Presto Pizza has a required rate of return of 10% and a corporate tax rate of 40%. Note: You don't need to find the present value of all cash flows. Calculate only the relevant numbers required to answer the questions below

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