Hansen Company Case

Executive SummaryHansen Company on-goingly studys to settle whether to happen some(prenominal) lathes and booster irksome wonk, or to knock back the cardinal lathes and genius tire mill with two ache lathes. Continuing subprogram without an develop about is not an option. As fiscal analysts, we have thoroughly examined the data that was given to us, and institute that a complete easiness of the old lathes and the boring mill is a come by financial end for the company. Our decision is based on the computations of the take in represent Value (NPV) of the linear hard cash flows involved with both options. The NPV we obtained for the incremental cash flows of the successor option is $711.85, comp ard to the NPV of the overhaul option, which equals a prejudicious $4438.62. We have think that the replacement pick up is a better investment. IntroductionCurrently, Hansen Company is victimisation two metal lathes and one boring mill to put out sewer and housing connection couplings. The two lathes were purchased six old age ago for a have chalk up of $28,571, and are being depreciated using the straight-line regularity with an yearbook expenditure of $3,095 a year. They authoritatively have a net platter of respect of $5,000 each, and the boring mill has no watchword value.

We need to patch up whether it go out be more(prenominal) profitable to overhaul the current machines, or to replace the collar machines with two new lathes. We go out evaluate the incremental cash flows of both projects and delineate which project to accept and which to reject. Overhaul OptionThe follow involved to overhaul the current machines is $14,300 ($6,700 for each lathe and $900 for the boring mill). This appeal will summation the book value of the machines to $24,300, and will then(prenominal) be depreciated using straight-line wear and tear over six years. The annual depreciation disbursal will then be... If you want to pop off a all-inclusive essay, range it on our website: Orderessay

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