Problem 42IntroFacebook runs many data warehouses full of servers. Assume that each existingserver is 3 years old and was bought for $1,500. It could be sold for $600 now or for$300 in 2 years. The annual cost of running the server (for electricity, cooling andrepairs) is $240.A new server costs $1,400 today and could be sold for $175 in 5 years. The annualcost of running it is $140.Both types of servers are usable for 5 years and are linearly depreciated to zero over5 years.Facebook's marginal tax rate is 34% and the appropriate cost of capital for thisproject is 9%.Your task is to find out if Facebook should replace each server now or in two years.Part 1Attempt 1/5 for 10 pts.What is the present value of all cash flows if a new server is bought once right now?0+ decimalsSubmitPart 2Attempt 1/5 for 10 pts.What is the present value of all cash flows if the old server is sold now, and the newserver is bought now and then replaced every 5 years at the same terms?0+ decimalsSubmitPart 3Attempt 1/5 for 10 pts.What is the present value of all cash flows for the next 2 years if the old server iskept?0+ decimalsSubmitPart 4Attempt 1/5 for 10 pts.What is the present value of all cash flows if the server is first replaced in 2 years,and then every 5 years thereafter at the same terms?0+ decimalsSubmit

Present Value of Cash Flow:The future cash amount's current worth, at a given rate of return, is…

Answered: Part 1 Attempt 1/5 for 10 pts. What is…

Business

Finance

Part 1 Attempt 1/5 for 10 pts. What is the present value of all cash flows if a new server is bought once right now?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 2PB: Mortech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and...

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Question

Problem 42
Intro
Facebook runs many data warehouses full of servers. Assume that each existing
server is 3 years old and was bought for $1,500. It could be sold for $600 now or for
$300 in 2 years. The annual cost of running the server (for electricity, cooling and
repairs) is $240.
A new server costs $1,400 today and could be sold for $175 in 5 years. The annual
cost of running it is $140.
Both types of servers are usable for 5 years and are linearly depreciated to zero over
5 years.
Facebook's marginal tax rate is 34% and the appropriate cost of capital for this
project is 9%.
Your task is to find out if Facebook should replace each server now or in two years.
Part 1
Attempt 1/5 for 10 pts.
What is the present value of all cash flows if a new server is bought once right now?
0+ decimals
Submit
Part 2
Attempt 1/5 for 10 pts.
What is the present value of all cash flows if the old server is sold now, and the new
server is bought now and then replaced every 5 years at the same terms?
0+ decimals
Submit
Part 3
Attempt 1/5 for 10 pts.
What is the present value of all cash flows for the next 2 years if the old server is
kept?
0+ decimals
Submit
Part 4
Attempt 1/5 for 10 pts.
What is the present value of all cash flows if the server is first replaced in 2 years,
and then every 5 years thereafter at the same terms?
0+ decimals
Submit

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