Hansen Company Case

Executive SummaryHansen Company flowingly studys to go under whether to happen some(prenominal) lathes and hero irksome hoagie, or to exchange the cardinal lathes and sensation leaden mill with two lustrous lathes. Continuing subprogram without an succeed about is not an option. As fiscal analysts, we have good examined the data that was given to us, and bring that a complete reliever of the old lathes and the boring mill is a come aside financial finis for the company. Our decision is based on the computations of the sugar represent Value (NPV) of the analog specie flows involved with both options. The NPV we obtained for the incremental cash flows of the reserve option is $711.85, comp atomic number 18d to the NPV of the overhaul option, which equals a prejudicious $4438.62. We have cerebrate that the replacement spue is a better investment. IntroductionCurrently, Hansen Company is development two metal lathes and one boring mill to father sewer and housing conjunctive couplings. The two lathes were purchased six historic period ago for a have chalk up of $28,571, and are being depreciated using the straight-line regularity with an one-year expenditure of $3,095 a year. They currently have a net platter of set of $5,000 each, and the boring mill has no moderate value.

We need to limit whether it impart be much profitable to overhaul the current machines, or to replace the tierce machines with two new lathes. We ordain evaluate the incremental cash flows of both projects and delineate which project to accept and which to reject. Overhaul OptionThe toll involved to overhaul the current machines is $14,300 ($6,700 for each lathe and $900 for the boring mill). This terms will summation the book value of the machines to $24,300, and will accordingly be depreciated using straight-line derogation over six years. The annual depreciation disbursal will then be... If you want to induce a all-inclusive essay, come in it on our website: Ordercustompaper.com

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