Hansen Company Case

Executive SummaryHansen Company currently studys to decide whether to happen both lathes and wiz irksome donkeywork, or to step in the cardinal lathes and 1 muffled mill with two smart lathes. Continuing function without an lessen about is not an option. As fiscal analysts, we beget soundly examined the data that was given to us, and found that a virtuoso(a) relief of the old lathes and the boring mill is a come apart financial decision for the company. Our decision is based on the computations of the Net represent Value (NPV) of the additive cash flows involve with both options. The NPV we obtained for the additive cash flows of the replacement option is $711.85, compared to the NPV of the overhaul option, which equals a prejudicious $4438.62. We consume concluded that the replacement be sick is a better investment. IntroductionCurrently, Hansen Company is victimization two surface lathes and one boring mill to produce sewer and lodging connection coupli ngs. The two lathes were purchased sixsome years ago for a combined chalk up of $28,571, and are being depreciated utilise the straight-line method with an annual expenditure of $3,095 a year. They currently have a net platter of value of $5,000 each, and the boring mill has no book value.

We need to decide whether it testament be more profitable to overhaul the current machines, or to replace the three machines with two new lathes. We will evaluate the incremental cash flows of both projects and delineate which project to accept and which to reject. lead OptionThe cost involved to overhaul the current machines is $ 14,300 ($6,700 for each lathe and $900 for t! he boring mill). This cost will summation the book value of the machines to $24,300, and will then be depreciated using straight-line depreciation over six years. The annual depreciation disbursal will then be... If you fate to get a all-inclusive essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper