This paper circulates around the core theme of FINANCE 6301 – Kittyâs Cookies is considering replacing its #2 oven. together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Kittyâs Cookies is considering replacing its #2 oven. The oven was installed 10 years ago at a cost of $300,000 and has been fully depreciated. The current market value of the old oven is $70,000. A new high efficiency oven would cost $120,000. It would be fully depreciated over 5 years using straight-line depreciation to a zero book value. Annual sales would increase by $18,000 due to the increased productivity of the new oven. Improved energy efficiency would reduce annual operating costs by $20,000. Tax rate is 40%. Cost of capital is 12%. Find the NPV. Should they replace the #2 oven with a new one? Assume a 5-year planning horizon and a horizon value of zero.
