holiday manufacturing is considering replacing an existing machine. The new machine costs $1.2 million and requires installation costs of $150,000.

holiday manufacturing is considering replacing an existing machine. The new machine costs $1.2 million and requires installation costs of $150,000. The existing machine is 2 years old, cost $800,000 new, and has a book value (UCC) of $367,962. The current market value of the machine is $185,000. The machine could be used for 5 more years, when it would be worth $50,000. Over its 5-year life, the new machine should reduce operating costs by $350,000 per year. The CCA rate on the machine is 30 percent. The new machine could be sold for $250,000, net of removal and cleanup costs, at the end of 5 years. An increase investment in net working capital of $25,000 will be needed to support operations if the new machine is acquired. The firm has a 9 percent cost of capital and a 40 percent tax rate. Determine the NPV and IRR of the proposal

Order the answer to view it

Place this order or similar order and get an amazing discount. USE Discount code “GET20” for 20% discount

Posted in Uncategorized