posted by Ruth on .
The management of cooper Equipment is planning to purchase a new milling machine that will cost 160,000 installed.The old machine has been fully depreciated but can be sold for 15,000. The new machine will be depreciated on a straight-line basis over its 10 year economic life to an estimated salvage value of 10,000. If this milling machine will save Cooper 20,000 a year in production expenses, what are the annual net cash flows associated with the purchase of this machine? Assume a marginal tax rate of 40 percent.
Describe the financial statement forecasting process.
Many corporate acquisitions result in losses to the acquiring firms' stockholders. Accordingly, why do firms purchase other corporations? Are they simply paying too much for the acquired corporation? A co-worker asks your opinion. Specifically state the reasons for your argument.
• Explain the importance of the marginal cost of capital (MCC) schedule in financial decision making.
• Describe the financial statement forecasting process.