Your company decides to buy the new equipment to replace the existing equipment. For evaluating the new equipment, would you please explain whether the following cash flows should be included in the analysis. WHY?
i Reduction in operating costs annually for the use of the new equipment;
ii research cost;
iii Annual cash operating costs total for the use of existing equipment; and
iv loan for financing the new equipment.
We will use the concept of Incremental analysis. It is used to analyze the financial information needed for decision making. It identifies the relevant revenues and/or costs of each alternative and the expected impact of the alternative on future ...
Response helps in doing the project analysis.