Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: Your firm uses a manufacturing machine that was purchased six years ago. The machine’s book rate today is 0, & you suppose it can work for five years more. The production cost with this machine is dollar six per unit. Your supplier offered a new machine in a trade in deal. The new machine’s cost is dollar 55,000, and the supplier is willing to buy the old machine from you for dollar 18,000. The production cost per unit in the new machine is dollar 3.5, & the new machine has straight line depreciation for five years to zero terminal value. You have determined that your firm will sell 6500 units per year, with a selling price of dollar 17 each. The firm’s tax rate is 30 percent and its discount rate is 9 percent.

[A] Should the firm do the trade-in deal? [i.e., should the old machine be replaced?]

[B] Compute the IRR of the trade-in. [i.e., find out the IRR of the relative cash flows]

[C] Make a graph showing the profitability of the investment depending on number of units sold

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M917988

Have any Question? 


Related Questions in Basic Finance

T-bill auctionhow can investors using the primary t-bill

T-Bill Auction : How can investors using the primary T-bill market be assured that their bid will be accepted? Why do large corporations typically make competitive bids rather than noncompetitive bids for T-bills?

The united states purchased alaska in 1867 for 72m where

The United States purchased Alaska in 1867 for $7.2M (where Mstands for million). Assume that federal tax revenue from the state of Alaska (net federal expenditures) is $55.1M in 2012 and that tax revenue started in 1868 ...

Financial research reportenvision that you are a money

Financial Research Report Envision that you are a money related chief looking into speculations for your customer that adjust to its venture objectives. Utilize the Internet or the Strayer Library to scrutinize any U.S. ...

Suppose a firm has several divisions each with a unique

Suppose a firm has several divisions, each with a unique area of business. What role does the firm-wide weighted average cost of capital play when determining a project's cost of capital in a given division?

A company is planning to open 100 new outlets that are

A company is planning to open 100 new outlets that are expected to generate, in total, $15 million in free cash flows per year, with a growth rate of 3% in perpetuity. If the company's WACC is 10%, what is the NPV of thi ...

Suppose you buy call options on microsoft stock each option

Suppose you buy call options on Microsoft stock. Each option costs $2 and has a strike price of $40 and an expiration date of July 1. Discuss whether you would exercise the options in each of the following situations, an ...

If the public chooses to hold no currency does the fed

If the public chooses to hold no currency, does the Fed control the money supply? If depository institutions choose to always loan up, does the Fed have precise control? If both of these situations occur, does the Fed ha ...

Suppose the condition monitoring and the failure statistics

Suppose the condition monitoring and the failure statistics departments of company XYZ have 9 and 11 members, respectively. In how many ways can we select a committee to develop a reliability program if the committee is ...

Yield curve what factors influence the shape of the yield

Yield Curve : What factors influence the shape of the yield curve? Describe how financial market participants use the yield curve.

Question how many months it will take to grow your money

Question: How many months it will take to grow your money from $10,250 to $25,000 if you can earn an interest of 8% compounded monthly? How many years will it take? Please show work.

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate