Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

An officer for a large construction company is feeling nervous. The anxiety is caused by a new excavator just released onto the market. The new excavator makes the one purchased by the company a year ago obsolete. As a result, the market value for the company's excavator has dropped significantly, from $400,000 a year ago to $40,000 now. In 10 years, it would be worth only $5,000. The new excavator costs only $650,000 and would increase operating revenues by$70,000 annually. The new equipment has a 10-year life and expected salvage value of $105,000. What should the officer do? The tax rate is 35%, the CCA rate, 25% for both excavators and the required rate of return for the company is 13%.

Initial cost of new machine, Salvage value of old machine, PV of cost savings, PV of salvage value of old machine, CCA tax shield of original machine, CCA tax shield of new machine, NPV, and a recommendation

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M942915

Have any Question? 


Related Questions in Basic Finance

1 in analyzing the data from an experiment why is it not

1. In analyzing the data from an experiment, why is it not sufficient simply to examine the condition means to see whether they differ? 2. Assuming that all confounds were eliminated, the means of the conditions in an ex ...

Mass-transfer data were obtained for the vaporization of

Mass-transfer data were obtained for the vaporization of naphthalene into a turbulent gas stream flowing in an annulus. Both the inside rod and the outer pipe of the annular conduit were made of naphthalene. To correlate ...

You buy a stock for 35 per share one year later you receive

You buy a stock for $35 per share. One year later you receive a dividend of $3.50 per share and sell the stock for $30 per share. 1.What is your total rate of return on this investment?. 2.What is your capital gain or lo ...

1a how does a company become exposed to interest rate riskb

1.(a) How does a company become exposed to interest rate risk? (b) How does a bank become exposed to interest rate risk? 2 .How might a company attempt to reduce interest rate risk? 3. How might a bank attempt to reduce ...

What economic factors play into creating jobs a

What economic factors play into creating jobs? A corporation/business needs to have customers in order to hire workers. How do interest rates affect available jobs?

1 what are the tensions between standardization and

1. What are the tensions between standardization and localization of the PM system of the MNE? 2. How does the international character of the MNE impact the design of the PM system? 3. How does the international characte ...

Drozs hiking gear inc has found that its common equity

Droz's Hiking Gear, Inc., has found that its common equity capital shares have a beta equal to 1.5 while the risk-free return is 8 percent and the expected return on the market is 14 percent. It has 7-year maturity bonds ...

Define a currency option related terms and pricing

Define a currency option, related terms, and pricing factors.

Part 1 short questions a short precise and concise answer

Part 1: Short questions. A short, precise and concise answer will obtain full credit. (NB: We will take the seven highest grades of your answers to these eight questions.) Question 1 A treasurer argues with the CFO that ...

What is the difference between a pure discount bond and a

What is the difference between a pure discount bond and a bond that trades at a discount? If issuers successfully sell pure discount bonds in the market, investors must want them. Can you explain why any bond purchaser m ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen