Table 11.4
Degnan Dance Company, Inc., a manufacturer of dance and exercise apparel, is considering replacing an existing piece of equipment with a more sophisticated machine. The following information is given. The firm pays 40 percent taxes on ordinary income and capital gains.
-Given the information in Table 11.4 and 15 percent cost of capital,
(a) compute the net present value.
(b) Should the project be accepted?

Question

Table 11.4
Degnan Dance Company, Inc., a manufacturer of dance and exercise apparel, is considering replacing an existing piece of equipment with a more sophisticated machine. The following information is given.   The firm pays 40 percent taxes on ordinary income and capital gains.
-Given the information in Table 11.4 and 15 percent cost of capital,
(a) compute the net present value.
(b) Should the project be accepted?

Quizplus · Accepted Answer

The Answer of Table 11.4
Degnan Dance Company, Inc., a manufacturer of dance and exercise apparel, is considering replacing an existing piece of equipment with a more sophisticated machine. The following information is given.   The firm pays 40 percent taxes on ordinary income and capital gains.
-Given the information in Table 11.4 and 15 percent cost of capital,
(a) compute the net present value.
(b) Should the project be accepted?

Table 11.4 Degnan Dance Company, Inc., a Manufacturer of Dance and Exercise