Estimating Cash Flows in Replacement Decisions
This mini case study guides students in estimating cash flows for a capital replacement decision at Acme.Com Company. It covers evaluating the financial impact of replacing production equipment, including asset costs, depreciation (MACRS), initial investment, tax effects, salvage values, cost savings, and inventory implications. The case provides data on equipment purchase/sale timing, annual cost reductions, and depreciation rates over a 10-year asset lifecycle, offering a hands-on scenario for learning capital budgeting methodologies in a real-world business context