A pharmaceutical company has some existing semiautomated production equipment that they are considering replacing This equipment has a present MV of $55,000 and a BV of $33,000. It has five more years of straight line depreciation available ( kept) of $6,600 per year, at which time its BV would be 50. The estimated MV of the equipment five years from now (in year-zero dollars) is $18,000. The MV rate of increase on this type of equipment has been averaging 42% per year. The total operating and maintenance and other related expenses are averaging $26.500 (AS) per year New automated replacement equipment would be leased. Estimated operating and maintenance and related company expenses for the new equipment are $11,900 per year. The annual leasing cost would be $24,100. The after-tax MARR (with an inflation component) is 10% per year () -25%; and the analysis period is five years. Based on an after-tax, AS analysis, should the replacement be made? Base your answer on the actual IRR of the incremental cash flow The actual IRR of the incremental cash flow is % (Round to one decimal place) GALD
A pharmaceutical company has some existing semiautomated production equipment that they are considering replacing This equipment has a present MV of $55,000 and a BV of $33,000. It has five more years of straight line depreciation available ( kept) of $6,600 per year, at which time its BV would be 50. The estimated MV of the equipment five years from now (in year-zero dollars) is $18,000. The MV rate of increase on this type of equipment has been averaging 42% per year. The total operating and maintenance and other related expenses are averaging $26.500 (AS) per year New automated replacement equipment would be leased. Estimated operating and maintenance and related company expenses for the new equipment are $11,900 per year. The annual leasing cost would be $24,100. The after-tax MARR (with an inflation component) is 10% per year () -25%; and the analysis period is five years. Based on an after-tax, AS analysis, should the replacement be made? Base your answer on the actual IRR of the incremental cash flow The actual IRR of the incremental cash flow is % (Round to one decimal place) GALD
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 15P
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Transcribed Image Text:Apharmaceutical company has some existing semiautomated production equipment that they are considering replacing This equipment has a present MV of $55,000 and a BV of
$33,000. It has five more years of straight-line depreciation available ( kept) of $6,600 per year, at which time its BV would be $0. The estimated MV of the equipment five years from
now (in year-zero dollars) is $18,000. The MV rate of increase on this type of equipment has been averaging 4 2% per year. The total operating and maintenance and other related
expenses are averaging $26,500 (AS) per year
New automated replacement equipment would be leased. Estimated operating and maintenance and related company expenses for the new equipment are $11,900 per year. The
annual leasing cost would be $24,100. The after-tax MARR (with an inflation component) is 10% per year (): -25%; and the analysis period is five years, Based on an after-tax, AS
analysis, should the replacement be made? Base your answer on the actual IRR of the incremental cash flow
The actual IRR of the incremental cash flow is% (Round to one decimal place)
GTS
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