Hello,Can you please help with this question? I must be done in EXCEL format and I need the formulas that used to arrive at the answers so that I get an understanding of what I need to do. Thank you ANSWER TO 12.9 (PROBLEM 3) THIS HAS FOUR PARTS (A, B, C, & D)Prob1Prob2Prob3Prob4Prob512-9 NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. Thebase price is $135,000 and shipping and installation costs would add another $8,000. Themachine falls into the MACRS 3-year class, and it would be sold after 3 years for $94,500.The applicable depreciation rates are 33%, 45%, 15%, and 7% as discussed in Appendix 12A.The machine would require a $5,000 increase in net operating working capital (increasedinventory less increased accounts payable). There would be no effect on revenues, but pretaxlabor costs would decline by $52,000 per year. The marginal tax rate is 35%, and the WACCis 8%. Also, the firm spent $4,500 last year investigating the feasibility of using the machine.a. How should the $4,500 spent last year be handled?b. What is the initial investment outlay for the machine for capital budgeting purposes,that is, what is the Year 0 project cash flow?c. What are the project's annual cash flows during Years 1, 2, and 3?d. Should the machine be purchased? Explain your answer.

Answered: Image /qna-images/answer/82e2163d-dab7-4278-815b-ec24b2623c74.jpg

a. How should the $4,500 spent last year be handled? b. What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? c. What are the project's annual cash flows during Years 1, 2, and 3? d. Should the machine be purchased? Explain your answer.

a. How should the $4,500 spent last year be handled? b. What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? c. What are the project's annual cash flows during Years 1, 2, and 3? d. Should the machine be purchased? Explain your answer.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk

Section: Chapter Questions

Problem 6P: New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its...

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