Tamarisk Corp. is planning to replace an old asset with new equipment that will operate more efficiently. The following amounts maybe relevant to this analysis.Cost of old assetBook value of old assetSelling price of old assetPurchase price of new replacement assetEstimated salvage value of new assetEstimated useful life of new assetEstimated annual net operating cash inflowsDiscount rateTax rate$12,000$2,000$2,000$18,800$2,2005 years$2,70011%20%/year for 5 yearsDetermine which amounts listed are relevant cash flows for Tamarisk Corp. as it considers this asset sale and replacement. Then, find the NPV of the new investment. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2decimal places e.g. 5,125.36. Enter negative amounts using either a negative sign preceding the number, e.g. -5,125.36 or parentheses, e.g.(5,125.36).)Click here to view the factor tableNPV $

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Tamarisk Corp. is planning to replace an old asset with new equipment that will operate more efficiently. The following amounts may be relevant to this analysis. Cost of old asset Book value of old asset Selling price of old asset Purchase price of new replacement asset Estimated salvage value of new asset Estimated useful life of new asset Estimated annual net operating cash inflows Discount rate Tax rate $12,000 $2,000 $2,000 $18,800 $2,200 5 $2,700 11% 20% years /year for 5 years Determine which amounts listed are relevant cash flows for Tamarisk Corp. as it considers this asset sale and replacement.

Tamarisk Corp. is planning to replace an old asset with new equipment that will operate more efficiently. The following amounts may be relevant to this analysis. Cost of old asset Book value of old asset Selling price of old asset Purchase price of new replacement asset Estimated salvage value of new asset Estimated useful life of new asset Estimated annual net operating cash inflows Discount rate Tax rate $12,000 $2,000 $2,000 $18,800 $2,200 5 $2,700 11% 20% years /year for 5 years Determine which amounts listed are relevant cash flows for Tamarisk Corp. as it considers this asset sale and replacement.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 3MAD

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