PROJECT #1FINANCIAL MANAGEMENT MBA 505Please show your work by submitting a Word or Excel file in the “Project 1 Drop Box”! INFORMATION OLD MACHINE:Original Purchase Price550,000.00Original Life10 YEARSRemaining Life5 YEARSStraight line depreciation in useSalvage Value50,000.00Current Fair Market Value260,000.00INFORMATION NEW MACHINE A:Purchase Price$895,000.00Estimated Life5 YEARSUse Straight Line Depreciation MethodEstimated Salvage Value10,000.00Estimated Net Operating Cash Flow Increase/Decrease (Prior to Depreciation and Taxes)End of Year 1100,000.00End of Year 2150,000.00End of Year 3250,000.00End of Year 4200,000.00End of Year 5200,000.00ASSUMPTIONS:Tax Rate40%WACC Rate7%1.Calculate the NPV if you keep the old machine. (Round up to the nearest dollar amount. DO NOT use $, commas, or decimal points) (Example $23,345.50 is entered as 23346)2.Calculate the NPV if you sell the old machine and buy new machine A. (Round up to the nearest dollar amount. DO NOT use $, commas, or decimal points) (Example $23,345.50 is entered as 23346)3. What decision do you suggest?A) Keep the old machine and do not buy the new machine.B) Sell the old machine and buy the new machine.4.List 3 risk factors that could change your answers above.
padding: 10px 20px;
margin: 4px 2px;