Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

ACME Manufacturing is considering replacing an existing production line with a new line that has a greater output capacity and operates with less labor than the existing line. The new line would cost $1 million, have a five-year life, and be depreciated using MACRS over three years. At the end of five years, the new line could be sold as scrap for $150,000 (in year 5 dollars). Because the new line is more automated, it would require fewer operators, resulting in a savings of $60,000 per year before tax and unadjusted for inflation (in today's dollars). Additional sales with the new machine are expected to result in additional net cash inflows, before tax, of $80,000 per year (in today's dollars). If ACME invests in the new line, a one-time investment of $10,000 in additional working capital will be required. The tax rate is 35 percent, the opportunity cost of capital is 10 percent, and the annual rate of inflation is 2.50 percent. What is the NPV of the new production line?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M939094

Have any Question? 


Related Questions in Basic Finance

1 what is the break-even mortgage interest rate beir in the

1. What is the break-even mortgage interest rate (BEIR) in the context of financial leverage? Would you ever expect an investor to pay a break-even interest rate when financing a property? Why or why not? 2. Why might a ...

What is meant by break even drivers identify two important

What is meant by break even drivers? identify two important drivers affecting the amount of revenues needed for ventures to break even Explain

Once a project is accepted country risk analysis for the

Once a project is accepted, country risk analysis for the foreign country involved is no longer necessary, assuming that no other proposed projects are being evaluated for that country. Do you agree with this statement? ...

1 what is the goal of a media partnership2 name and

1. What is the goal of a media partnership? 2. Name and describe six basic emergency management audiences. 3. What three factors do DHS and its state and local partners need to address to improve its communications with ...

1 how is performance management at dmg world media

1. How is performance management at dmg world media different from traditional performance management systems at other companies? 2. What was the impetus for developing a different performance management system at dmg wo ...

Als sport store has sales of 2720 costs of goods sold of

Al's Sport Store has sales of $2,720, costs of goods sold of $2,080, inventory of $516, and accounts receivable of $426. How many days, on average, does it take the firm to sell its inventory assuming that all sales are ...

1 what is the difference between venture capital firms and

1. What is the difference between venture capital firms and private equity firms? What roles do they play in the financial system? 2. The author of a newspaper article providing advice to renters observes that "landlords ...

Finance problems1 after placing 8000 in a savings account

Finance Problems 1. After placing $8,000 in a savings account paying annual compound interest of 7%, calculate the amount that will accumulate if it is left for 10 years? 2. Sarah Wiggum would like to make a single inves ...

Analyze print communication-find an example of print

Analyze print communication:- Find an example of print communication, for example, a flyer on campus, a newsletter, or a magazine ad. With a partner, discuss why the creator of the message may have chosen a print medium. ...

Questions1 calculate the value of a bond with pound100 face

Questions: 1) Calculate the value of a bond with £100 face value, 5 years to maturity, coupon rate of 7% p.a. paid annually, when the discount rate (expected rate of return on similar instruments) is 4% p.a. 2) Calculate ...

  • 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