Ask Question, Ask an Expert


Ask Basic Finance Expert

The Feldwyn Company is using a machine whose original cost was $72,000. The machine is two years old and has a current market value of $16,000. The asset is being depreciated over a 12 year original life toward a zero estimated final salvage value. There are no taxes associated with the sale of the old machine. Depreciation is on a straight-line basis.

Management is contemplating the purchase of a replacement that costs $75,000 and has an estimated salvage value of $10,000. The new machine will have a greater capacity and annual sales are expected to increase by $10,000. Operating efficiency with the new machine will also produce expected saving of $10,000 per year. Depreciation is on a straight-line basis over a ten year life.

Should the firm replace the asset, if the appropriate discount rate for the machine is 8% and the tax rate is 50%?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M940624

Have any Question? 

Related Questions in Basic Finance

Due to recent bad press a major healthcare company has

Due to recent bad press, a major healthcare company has experienced a market reevaluation. The firm has a $1,000 bond issue outstanding with 15 years to maturity and a coupon rate of 8%, with interest paid semiannually. ...

1 tall trees inc is using the net present value npv when

1. Tall Trees, Inc. is using the net present value (NPV) when evaluating projects. You have to find the NPV for the company's project, assuming the company's cost of capital is 9.83 percent. The initial outlay for the pr ...

1 illustrate a common trade-off that occurs between the

1. Illustrate a common trade-off that occurs between the work areas of logistics. 2. Discuss and elaborate on the following statement: "The selection of a superior location network can create substantial competitive adva ...

Professors note your answer is close but incorrectnbsp

Professors Note: Your answer is close but incorrect.  Please review "calculating the effective cost of short term credit" in your text.  You need to make sure that the note amount is the NET amount (what Worthington actu ...

Ethan is the beneficiary of an irrevocable trust created by

Ethan is the beneficiary of an irrevocable trust created by his uncle. Ethan will receive all income from the trust for life and he has the right to invade the trust corpus without restriction for the benefit of his heal ...

A companys dec 31st year-end balance sheet showed 72000 of

A company's Dec. 31 st year-end balance sheet showed $72,000 of inventory. The company uses the perpetual inventory system. After reviewing the company's records, the auditor noted the following items which had not been ...

Assignemnt investment and pension trust funds1 describe

Assignemnt: Investment and Pension Trust Funds 1. Describe GASB requirements for accounting for Investment Trust Funds, (a) a discussion of when the use of investment trust funds is appropriate. (b) the investments to be ...

Eat at my restaurant - cash flowwith this case we review

EAT AT MY RESTAURANT - CASH FLOW With this case, we review the cash flow of several restaurant companies. The restaurant companies reviewed and the year-end dates are as follows: 1. Yum Brands, Inc. December 25, 2010; De ...

1 when the federal reserve lowers the real interest rate

1. When the Federal Reserve lowers the real interest rate, what happens to the output gap and to the actual inflation rate? 2. What is the default risk premium, and why did it dramatically increase during the 2007-2009 r ...

Diamond toasterscost classificationdirect materials

Diamond Toasters Cost Classification Direct materials used 189,000 Property taxes, factory buiilding 27,000 Depreciation, factory building 54,000 Lease cost, factory equipment 63,000 Administraive office salaries 72,000 ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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