You are a Chief Executive Officer of the ACME Corporation. The firm plans to replace new...

 

Transcribed Image Text:

You are a Chief Executive Officer of the ACME Corporation. The firm plans to replace new machines to improve the production system costing $2,047,000. The new machines are expected to last five years with a salvage value of 15% of the original cost. During this time, the company will use a 30% CCA rate. The new machines will save $480,000 annually before taxes. The company's required rate of return is 7.35% and the corporate tax rate is 35%. The new production system requires the firm to increase net working capital by $300,000. Based on the given information, answer questions a and b. a) Please determine the PVCCATS of the purchase based on the given information. Please show all the calculations by which you came up with the final answer. (3 Points) You are a Chief Executive Officer of the ACME Corporation. The firm plans to replace new machines to improve the production system costing $2,047,000. The new machines are expected to last five years with a salvage value of 15% of the original cost. During this time, the company will use a 30% CCA rate. The new machines will save $480,000 annually before taxes. The company's required rate of return is 7.35% and the corporate tax rate is 35%. The new production system requires the firm to increase net working capital by $300,000. Based on the given information, answer questions a and b. a) Please determine the PVCCATS of the purchase based on the given information. Please show all the calculations by which you came up with the final answer. (3 Points) You are a Chief Executive Officer of the ACME Corporation. The firm plans to replace new machines to improve the production system costing $2,047,000. The new machines are expected to last five years with a salvage value of 15% of the original cost. During this time, the company will use a 30% CCA rate. The new machines will save $480,000 annually before taxes. The company's required rate of return is 7.35% and the corporate tax rate is 35%. The new production system requires the firm to increase net working capital by $300,000. Based on the given information, answer questions a and b. a) Please determine the PVCCATS of the purchase based on the given information. Please show all the calculations by which you came up with the final answer. (3 Points) You are a Chief Executive Officer of the ACME Corporation. The firm plans to replace new machines to improve the production system costing $2,047,000. The new machines are expected to last five years with a salvage value of 15% of the original cost. During this time, the company will use a 30% CCA rate. The new machines will save $480,000 annually before taxes. The company's required rate of return is 7.35% and the corporate tax rate is 35%. The new production system requires the firm to increase net working capital by $300,000. Based on the given information, answer questions a and b. a) Please determine the PVCCATS of the purchase based on the given information. Please show all the calculations by which you came up with the final answer. (3 Points)

Answer rating: 100% (QA)

To determine the Present Value of Cash Costs After Tax PVCCATS for the machine purchase we need to calculate the net cash flows for each year and then ... View the full answer