This paper circulates around the core theme of FINANCE 6301 – Kittyâs Cookies is considering replacing its second 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 second 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 second oven with a new one? Assume a 5-year planning horizon and a horizon value of zero.
