A company has the opportunity to purchase a new high-tech metal cutter: Corporate Finance Assignment, SMU, Singapore, Singapore

This assignment is designed to test students on Topic 7 (Investment Appraisal). Students are expected to appraise the attractiveness of a capital asset proposal. The emphasis is on deriving the relevant cash flows so as to make a reasoned recommendation.

Corporate Finance Individual Assignment

A company has the opportunity to purchase a new high-tech metal cutter which will save the company $14,000 each year in labour costs. This metal cutter cost $70,000. At the end of the useful life of seven years, the salvage value is expected to be $16,000. Depreciation is via the straight-line method.