+1 223-217-0404 info@assignmenthero.net

algs inc wants to purchase a new machine for 29 300 255038

ALGS Inc. wants to purchase a new machine for $29,300, excluding $1,500 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,000, and ALGS Inc. expects to sell it for that amount. The new machine would decrease operating costs by $8,000 each year of its economic life. The straight-line depreciation method would be used for the new machine, for a five-year period with no salvage value.


(a) Determine the cash payback period.

(b) Determine the approximate internal rate of return.

(c) Assuming the company has a required rate of return of 10%, state your conclusion on whether the new machine should be purchased.

Related Articles

an investor is in the 33 percent tax bracket and 255061

An investor is in the 33 percent tax bracket and pays long-term capital gains taxes of 15 percent. What are the taxes owed (or saved in the cases of losses) in the current tax year for each of the following situations? a) Net short-term capital gains of $3,000; net...

read more

anglar company has a 3 million 7 bank loan from 255066

Anglar Company has a $3 million 7% bank loan from Castle Rock Bank. On January 1, 2007, when the $3 million loan has three years remaining, Anglar contracts with Susan Investment Bank to enter into a three-year interest-rate swap with a $3 million notional amount....

read more