What is the NPV of the decision to purchase a new machine?.
A firm is considering an investment in a new machine with a price of $18.15 million to replace its e Show more A firm is considering an investment in a new machine with a price of $18.15 million to replace its existing machine. The current machine has a book value of $6.15 million and a market value of $4.65 million. The new machine is expected to have a four-year life and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine it expects to save $6.85 million in operating costs each year over the next four years. Both machines will have no salvage value in four years. If the firm purchases the new machine it will also need an investment of $265000 in net working capital. The required return on the investment is 12 percent and the tax rate is 35 percen What is the NPV of the decision to purchase a new machine? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g. 32.16). Enter your answer in dollars not millions of dollars i.e. 1234567.) What is the IRR of the decision to purchase a new machine? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g. 32.16) What is the NPV of the decision to purchase the old machine? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g. 32.16). Enter your answer in dollars not millions of dollars i.e. 1234567. Negative amount should be indicated by a minus sign.) What is the IRR of the decision to purchase the old machine? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g. 32.16). Negative amount should be indicated by a minus sign.) Show less
What is the NPV of the decision to purchase a new machine?
