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For my practice problems I have been assigned. Crane Inc. is considering replacing the equipment it uses to produce to cranes.
For my practice problems I have been assigned. Any help or tips on how to solve these problems is very appreciated
1.
Crane Inc. is considering replacing the equipment it uses to produce to cranes. The equipment would cost $1.37 million, have a 12-year life, and lower manufacturing costs by an estimated $310,000 per year. The equipment will be depreciated using straight-line to a book value of zero. The required rate of return is 15% and the tax rate is 35%. Calculate the net income for this proposed project. (Round to two decimal places)
2 . Megatrac Co. is evaluating tow different machines. Machine A costs $215,000 has a four year life, and has a pretax operating costs of $40,000 per year. Machine B costs $270,000, has a six-year life, and a has a pretax operating cost of $10,000 per year. Both machines use straight line depreciation to zero over the project's life and assume a salvage value of $20,000. The company has a 35% tax rate and a discount rate of 12%. Calculate the equivalent annual cost for Machine A. (Enter a positive number and round to 2 decimals)
