okntencesA new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor wouldactually be worthless in five years. The new monitor would save $450,000 per year before taxes and operating costs. If we require a15% return, what is the NPV of the purchase? Assume a tax rate of 40%. (Do not round intermediate calculations. Round the finalanswer to 2 decimal places. Omit $ sign in your response.)NPV

Cost of monitor = 990,000depreciation rate = 30%savings in operating cost before taxes =…

A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worthless in five years. The new monitor would save $460,000 per year before taxes and operating costs. If we require a 15% return, what is the NPV of the purchase? Assume a tax rate of 40%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) $ NPV

A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worthless in five years. The new monitor would save $460,000 per year before taxes and operating costs. If we require a 15% return, what is the NPV of the purchase? Assume a tax rate of 40%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) $ NPV

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 17P: The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will...

See similar textbooks

Similar questions

A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class 10). The monitor would actually be worthless in five years. The new monitor would save $460,000 per year before taxes and operating costs. If we require a 15% return, what is the NPV of the purchase? Assume a tax rate of 40%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NPV
A new electronic process monitor costs $990,000. This cost could be depreciated at 30 percent per year (Class 10). The monitor would actually be worthless in five years. The new monitor would save $460,000 per year before taxes and operating costs. If we require a 15 percent return, what is the NPV of the purchase? Assume a tax rate of 40 percent. (Do not round intermediate calculations. Round the final answer to 2 decimal places.) NPV
b. Cendrawasih Inc. is considering replacing the equipment it uses to produce crayons. The equipment would cost RM1.37 million, have a 12-year life, and lower manufacturing costs by an estimated RM304,000 a year. The equipment will be depreciated using straight-line depreciation to a book value of zero. The required rate of return is 15 percent and the tax rate is 35 percent. Determine the net income from this proposed project.
A new electronic process monitor costs $990,000. This cost could be depreciated at 30% per year (Class The monitor would actually be worth $100,000 in five years. The new monitor would save $460,000 per year before taxes and operating costs. Suppose the new monitor requires us to increase net working capital by $47,200 when we buy it. If we require a 15% return, what is the NPV of the purchase? Assume a tax rate of 40%. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)
A new machine costs $1,050,110 and falls in a 34.00% CCA class. The machine will have zero value after 5 years of use but will save $487,790 annually in operating costs before taxes in those five years. Assume a tax rate of 36.33%. Using a required return of 17.27%, what is the NPV of the machine purchase?
You are considering purchasing a CNCmachine which costs $150,000. This machine willhave an estimated service life of 10 years with a netafter-tax salvage value of $15,000. Its annual aftertax operating and maintenance costs are estimatedto be $50,000. To expect an 18% rate of return oninvestment, what would be the required minimumannual after-tax revenues?
Suppose you are considering an investment project that requires $800.000, has a six-year life and has a salvage value of $100,000. Sales volume is projected 10 be 65,000 units per year. Price per unit is $63, variable cos! per unit is $42, and fixed costs are $532,000 per year. The depreciation method is a five-year MACRS. 1l1e tax rate is 35% and you expect a 20% return on this investment.(a) Determine The break-even sales volume.(b) Calculate the cash flows o( the base case over six years and its NPW.(c) lf the sales price per unit increases to $400, what is the required break-even volume?(d) Suppose the projections are given for price, sales volume, variable costs, and fixed costs are all accurate to within ± 15%. What would be the NPW Figures of the best-case and worst-case scenarios?
HI Corporation is considering the purchase of a machine that promises to reduce operating costs by the same amount for every year of its 6-year useful life. The machine will cost $208,780 and has no salvage value. The machine has a 14% internal rate of return. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Required: What are the annual cost savings promised by the machine? (Round your intermediate calculations and final answer to the nearest whole dollar amount.) Annual cost savings 2$ 53,685
Your firm needs a machine which costs $280,000, and requires $43,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 21% and a discount rate of 13%. If this machine can be sold for $28,000 at the end of year 3, what is the after tax salvage value? Multiple Choice $26,477.08 $7,252.00 $22,120.00 $16,391
A new machine costs $764,850 and falls in a 25.50% CCA class. The machine will have zero value after 5 years of use but will save $355,360 annually in operating costs before taxes in those five years. Assume a tax rate of 32.25%. Using a required return of 13.19%, what is the present value of the CCA tax shield? Options $137,790 $141,618 $145,445 $149,273 $153,100
A proposed cost-saving device has an installed cost of $600,000. It is in Class 8 (CCA rate=20%) for CCA purposes. It will actually function for five years, at which time it will have no value. There are no working capital consequences from the investment, and the tax rate is 35%. a. What must the pre-tax cost savings be for us to favour the investment? We require an 11% return. (Hint: This one is a variation on the problem of setting a bid price.) (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Cost savings 120350.41 b. Suppose the device will be worth $84,000 in salvage (before taxes). How does this change your answer? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Cost savings $143400.10
A proposed cost-saving device has an installed cost of $530,000. It is in Class 8 (CCA rate-20%) for CCA purposes. It will actually function for five years, at which time it will have no value. There are no working capital consequences from the investment, and the tax rate is 35% a What must the pre-tax cost savings be for us to favour the investment? We require an 12% return (Hint This one is a variation on the problem of setting a bid price) (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response) Cost savings $ 171202.92 b. Suppose the device will be worth $77,000 in salvage (before taxes) How does this change your answer? (Do not round your intermediate calculations, Round the final answer to 2 decimal places. Omit $ sign in your response) Cost savings $1647981