CCNY, Inc. is considering the acquistition of a new left-handed press. The base price of the press is indicated below. In addition there are modification costs, noted below, for CCNY's special use. The press falls into the MACRS 3-year class. The new press is expected to speed up production and result in an increase in gross annual sales and an increase in annual variable costs as noted below. Inventories, accounts payable, and accounts receivable are all expected to increase (as noted) to support the heightened activity. The press is expected to be sold after three years for the given salvage value. The tax rate and appropriate discount rate are noted. Find the NPV of this project and indicate if the press should be purchased. A Gross Sales A Variable cost $2,727,000|A Inventory $3,848,222 $45,450 $54,540 A Accounts Payable $204,525 Salvage Value $204,525 $1,150,853 Base Price modification $1,363,500 A Accounts Receivable Discount rate 12% Tax rate 30%
CCNY, Inc. is considering the acquistition of a new left-handed press. The base price of the press is indicated below. In addition there are modification costs, noted below, for CCNY's special use. The press falls into the MACRS 3-year class. The new press is expected to speed up production and result in an increase in gross annual sales and an increase in annual variable costs as noted below. Inventories, accounts payable, and accounts receivable are all expected to increase (as noted) to support the heightened activity. The press is expected to be sold after three years for the given salvage value. The tax rate and appropriate discount rate are noted. Find the NPV of this project and indicate if the press should be purchased. A Gross Sales A Variable cost $2,727,000|A Inventory $3,848,222 $45,450 $54,540 A Accounts Payable $204,525 Salvage Value $204,525 $1,150,853 Base Price modification $1,363,500 A Accounts Receivable Discount rate 12% Tax rate 30%
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 5MAD: Home Garden Inc. is considering the construction of a distribution warehouse in West Virginia to...
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