Assignment_10 - The tax rate is 40 Weighted average cost of...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Assignment 10 A) Peter, CFO of Campus Company, will replace the existing machine with a new machine that cost $100,000 and required installation cost for $10,000. The new machine will be depreciated over 5 year. The new machine will increase the utilities expenses from $50,000 per year to $70,000. However, the annual salary expense will be reduced from $100,000 to $40,000 per year. The new machine requires investment in net working capital for $22,000. At the end of 5 years, the new machine could be sold to $25,000.
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: The tax rate is 40%. Weighted average cost of capital is 20%. The current machine was purchased three years ago. It has original cost of $50,000 and expected useful life of 5 years. It can be sold for $25,000 now. Using Capital budgeting to analyze this project. (the required payback period is 3 years) B) The information of 10 possible projects are provided. If the firm has the investment limitation at $1.5million, which project should be invested...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern