Múltiple ChoiceO.OO$(53,014)$(49,014)$(55,014)$(70,014) Assume that a company is choosing between two alternatives-keep an existing machine or replace it with a new machine. Thecosts associated with the two alternatives are summarized as follows:Purchase cost (new)Remaining book valueOverhaul needed nowExistingMachine$ 15,000$ 6,000$ 5,000NewMachine$ 22,000Annual cash operating costsSalvage value (now)Salvage value (eight years from now)$6,000Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.If the company overhauls its existing machine, it will be usable for eight more years. If it buys the new machine, it will be used foreight years. Assuming a discount rate of 13%, what is the net present value of the cash flows associated with keeping the existingmachine?$ 10,500$ 2,000$1,000$ 7,000

Name: Múltiple ChoiceO.OO$(53,014)$(49,014)$(55,014)$(70,014) Assume that a
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Description: Múltiple ChoiceO.OO$(53,014)$(49,014)$(55,014)$(70,014) Assume that a company is choosing between two alternatives-keep an existing machine or replace it with a new machine. Thecosts associated with the two alternatives are summarized as follows:Pur

It represents the amount of profitability in absolute dollar terms generated by the project after…

Answered: Múltiple Choice O O о $(53,014)…

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Finance

Múltiple Choice O O о $(53,014) $(49,014) $(55,014) $(70,014)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 15P

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Assume that a company is choosing between two alternatives—keep an existing machine or replace it with a machine. The costs associated with the two alternatives are summarized as follows: Existing Machine New Machine Purchase cost (new) $ 15,000 $ 26,000 Remaining book value $ 6,000 Overhaul needed now $ 5,000 Annual cash operating costs $ 11,500 $ 7,000 Salvage value (now) $ 2,000 Salvage value (eight years from now) $ 1,000 $ 6,000 If the company overhauls its existing machine, it will be usable for eight more years. If it buys the new machine, it will be used for eight years. Based on a net present value analysis with a discount rate of 14%, what is the financial advantage (disadvantage) of replacing the existing machine with a new machine?
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Sheridan Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided here. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Machine A $78,200 8 years Profitability index 0 $19,800 $5,130 Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). Round answer for present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, eg. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Machine A Machine B $182,000 8 years $39,600 $10,180 Machine B
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Click here to view the factor table. Net present value Machine A Profitability index $78,200 8 years Which machine should be purchased? $19,800 $5,130 Machine A 0 Machine A should be purchased. Machine B Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to O decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) $182,000 8 years 0 $39,600…