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ICE Princess25 [194]
3 years ago
7

4. Builtrite D is considering the purchase of a new machine for $500,000 which would require a $5000 installation charge. Employ

ees would need to go through a brief training session to operate the machine properly which would cost $25,000. In addition, an increase in net working capital of $30,000 would be required. The machine has an expected life of 10 years and due to efficiencies, labor costs are expected to decrease $150,000 annually (before depreciation and taxes). Assume straight-line depreciation, a 34% marginal tax rate and a cost of capital of 15%. Should Builtrite D purchase the machine?
Mathematics
1 answer:
Paraphin [41]3 years ago
3 0

Answer:

Builtrite D should purchase the machine

Step-by-step explanation:

Cash outflow in year zero = $ 500,000 + $ 25,000 ( training cost ) + $ 30,000 ( Net working capital)

Cash outflow in year zero = $ 555,000

Terminal cash flow in year 10  = $ 150,000 + $ 30,000 ( NWC)

Terminal cash flow in year 10  = $ 180,000

Operating cash flow per year = [ Savings - expenses - depreciation ] X ( 1 - tax rate) + depreciation

Net present value = -500,000 + \frac{116,000}{1.15^1} + \frac{116,000}{1.15^2} +...+ \frac{180,000}{1.15^{10}}

The Net present value of purchasing the machine = $32,071.42

Builtrite D should purchase the machine

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Step-by-step explanation:

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Answer:

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Step-by-step explanation:

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Answer:

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Step-by-step explanation:

Follow the steps in the equation. X is your number. First you halve it, then you add 15. Next, set it equal to the other side. The second side is 5 + (because it is the sum) and 3x (the product of 3 and x means multiply them)

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Pedro uses shapes to make a funny animal. Which best tells about the
Pani-rosa [81]

Answer:

The sides of all the shapes are straight

Step-by-step explanation:

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Answer:

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