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The company is purchasing new technological machine for 18 mil. USD, where 10 mil. USD will be paid right now, 5 mil. USD in the end of first year and last 3 mil. USD in the end of the second year. Within installation of new machine, we are expecting that inventories will increase by 2, 3 mil. USD, account receivables will increase by 750 000 USD and in the same time short-term borrowing will increase by 250 000 mil. USD. Old machine which will be replaced by new one, can be sold for 600 000 mil. USD, salvage value is 500 000 USD. Corporate tax rate is 20 %. Discount factor of the company is 10 %. Calculate all expenses involved with the purchase of new machine.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93058904

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