一道公司财务英文题,关于capital budgeting 的,King tong Ltd is considering replacing an old machine used to produce leather boots with a new machine costing $250,000.Shipping costs of $10,...and installation costs of $15,000 will be incurre

一道公司财务英文题,关于capital budgeting 的,King tong Ltd is considering replacing an old machine used to produce leather boots with a new machine costing $250,000.Shipping costs of $10,...and installation costs of $15,000 will be incurre
一道公司财务英文题,关于capital budgeting 的,
King tong Ltd is considering replacing an old machine used to produce leather boots with a new machine costing $250,000.Shipping costs of $10,...and installation costs of $15,000 will be incurred.The old machine presently has a book value of $50,000 and could be sold for $70,000.The old machine is being depreciated on a straight line basis down to a slavage value of zero over the next five years.Before starting production using the new machine,the firm has to incur extra training costs amouting to $22,500.Although the purchase of the new machine will not produce any increase in sale revenue,it will result in a reduction in defect costs of$12,000 per annum However,maintenance costs will increase by $30,000 per annum.In addition,it is anticipated that only 2 operaters will be needed for new machine as opposed to 5 operators for the old machine.Each operator receives an annual salary of $60,000.This new machine has an expected life of 5 years,after which it will have salvage balue of $90,000.Assume straight line depreciation down to zero value.The majorities of King Tong Ltd.shareholders are overseas residents and has an effective tax rate of 30% King tong has stipulated 2year payback period.
Required:
The initially outlay
The incremental cash flows associated with the proposal
The Terminal cash flow
The Net Present Value and your recommendation rearding the proposal
The payback period and your recommendation regarding the proposal.

一道公司财务英文题,关于capital budgeting 的,King tong Ltd is considering replacing an old machine used to produce leather boots with a new machine costing $250,000.Shipping costs of $10,...and installation costs of $15,000 will be incurre
Cash Flow of Time 0:
Buy new machine:-250,000
Shipping costs:-10,000,Installation costs:$15,000,Training costs:-$22,500
Total costs after tax:-47500*(1-30%)= -33,250
Sell ole machine,profit after tax:20000*(1-30%)= 14,000
Total Cash flow at time 0:-269,250
Cash flow at time 1-5:
Cost reduction:12,000
Maintenance Cost incresing:-30,000
Operator salary saving:60000*3=180,000
Total cost saving after tax:113400
Depreciation tax shield increasing:30%*(250000/5-50000/5)=12000
Total Cash flow at time 1-5:125,400
Cash flow at time 5:
Salvage value of new machine after tax:90000*0.7=63000
Thus the terminal cash flow will be 125400+63000=188,400
NPV can not be calculated as no discount rate.
NPV@10%=245233
NPV@15%=182432
NPV@20%=131091
Accept.
Payback=3 years
Reject.