Tо reduce fоrmwоrk costs, hаunched beаms should be аvoided.
The ABD cоmpаny is cоnsidering the purchаse оf а new machine to replace an out of date machine that has a book value of $32,000 and can be sold today for $8,000. The old machine is being depreciated on a straightline basis over 4 more years to a book value of $4000 at the end of the fourth year. The old machine generates annual revenues of $125,000 and annual expenses of $75,000. This machine requires a fixed investment of $15,000 in net working capital. The proposed new machine cost of 180,000, but requires shipping of $8,000 and installation of $12,000. This machine will be depreciated using the 3-yr. ACRS class rules using these percentages: .3334, .4444, .1481, .0741 over the Four years that the machine will be used. The new machine will require a fixed investment of $12500 in net working capital. It is expected to generate annual revenue of $185,000 and annual cash expenses of $85,000. If the old machine is used for four more years, it is expected to have only a cash market value of $2,000 at the end of the fourth year. The new machine expected to have a cash market value of $41,500. Working capital investments for both machines consists primarily of tools and spare parts that can be sold for full value at any time the machines are retired. The marginal tax rate is 25%. The appropriate discount rate is 10.5%. A. What is the current book value of the 'old machine'? B. What is the change in net working capital? C. What is the initial outlay (Cash Flow 0)? D. What is the change in revenues (as all 4 years are the same)? E. What is the change in expenses (as all 4 years are the same)? F. What is the change in depreciation expense for all four years (this will be different for each year) G. What is the change in taxes for each year (this will be different for each year) H. What is the change in operating cash flows for each year? I. IN year 4, there are terminal cash flows. What are these and what are their values? J. To calculate the NPV of this investment, what values would be entered into the cash flow buttons in your calculator? K. What is the NPV and IRR of this project. L. What is your recommendation (support your answer).