Lasting Impression Company - Case Study Example

pply for the installation of newer presses that would enable the company to meet its goals and also produce prints than the previous versions by the older presses. At the current moment, the company has considered the sale of the older presses in favor of acquiring newer versions. However, in this case, two versions of presses are available from which each, A and B, have differing output qualities. For example, press A is considered to be highly automated and selling at $830,000 with an installation fee of 40,000 while press B has a purchase price of $640,000 with an installation fee of 20,000 considering it is not as sophisticated as press A.

Analytically, press A is of higher value than press B due to its capabilities in producing prints of higher quality. However, when considering its value after five years after purchase, it will have depreciated to less than 50% of the current purchase as it would be legible to trade at $400,000 which is $15,000 less than the 50% mark on its current value. When considering press B, its current value is $640,000 and will be valued at 330 after five years before taxes. Considering the current value and the future value, press B would be of higher value considering the current rate of depreciation.

After depreciating to $330,000, press B would have depreciated by 48.4275% which is higher than the depreciation of press A of 51.8072%. When considering the initial investments, operating cash inflows, and terminal cash flows of each of these presses, press A has higher investment as it has a purchase price of $830,000 and an installation fee of $40,000 making its total investment $870,000. On the other hand, press B has a smaller investment budget as it trades at $640,000 and has an installation fee of $20,000 making its total investment $660,000.

With reference to the operating cash inflows, press A seems to have a higher cash inflow considering it is in its best functionality for the five years before it is considered a candidate