sjesk annysYou must evaluate the purchase of a proposed spectrometer for the RAD department. The base price is $260,000, and it would cost another £39,000 to modify the equipment for special use by thefirm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $91,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an$6,000 Increase v net operating working capital (apare parts inventory). The project would have no effect on revenues, but it should save the firm $28,000 per year in before-tax labor costs. The firm'smarginal federat-plus-state tax 80% The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions belowOpen spreadsheeta. What is the initial investment outlay for the spectrometer, that is, what is the Year O project cash flow? Round your answer to the nearest cent. Negative amount should be indicated by a minus1What are the project's annual cash flows in Years 1, 2, and 37 Round your answers to the nearest centIn Year 11KIn Year 21In Year 35If the WACCis 13%, should the spectrometer be purchasedYou 1413

Name: sjesk annysYou must evaluate the purchase of a proposed spectrometer
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Description: sjesk annysYou must evaluate the purchase of a proposed spectrometer for the RAD department. The base price is $260,000, and it would cost another £39,000 to modify the equipment for special use by thefirm. The equipment falls into the MACRS 3-year

NPV is also known as Net present Value. It is a capital budgeting technique which helps in decision…

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You must evaluate the purchas frm. The equipment fals increase w sign $ erat-plus-stite AX year class and would consed spectrometer for the R&D department. The base price is $260,000, and it would cost another £39,000 to modify the equipment for special use by the sold after 3 years for $92,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an ory) The project would have no effect on revenues, but it should save the firm $28,000 per year in before-tax labor costs. The firm in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to a wer the questions below In Year 28 80% The Ⓡ What are the project's annual cash In Year 18 Ⓡ the spectrometer, that Years 1, 2, and 37 Round your ansa c. If the WACC is 13%, should the spectromeler be purchased project cash flow? Round your

You must evaluate the purchas frm. The equipment fals increase w sign $ erat-plus-stite AX year class and would consed spectrometer for the R&D department. The base price is $260,000, and it would cost another £39,000 to modify the equipment for special use by the sold after 3 years for $92,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an ory) The project would have no effect on revenues, but it should save the firm $28,000 per year in before-tax labor costs. The firm in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to a wer the questions below In Year 28 80% The Ⓡ What are the project's annual cash In Year 18 Ⓡ the spectrometer, that Years 1, 2, and 37 Round your ansa c. If the WACC is 13%, should the spectromeler be purchased project cash flow? Round your

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?
You must evaluate the purchase of a proposed spectrometer for the RAD department. The base price is $120,000, and it would cost another $30,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $42,000. The applicable depreciation rates are 33%, 45%, 15%, and 75%. The equipment would require a $50,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $32,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%. Using the same data above, instead of MACRS depreciation method, the entity will use the straight-line method. Determine: 1. Project’s annual cash flows in Years 1, 2 and 3. 2. Calculate NPV, using the 12% WACC. 3. Should the equipment be purchased using the straight-line method of depreciation? Why?
You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $280,000, and it would cost another $42,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $84,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an $5,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $48,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. ||||||| Open spreadsheet -a. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash flow? Round your answer to the nearest cent. Negative amount should be indicated by…
You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $150,000, and it would cost another $22, 500 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $52, 500. The applicable depreciation rates are 33%, 45% , 15%, and 7%. The equipment would require a $13, 000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $30,000 per year in before - tax labor costs. The firm's marginal federal - plus - state tax rate is 40%. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash flow? Round your answer to the nearest cent. Negative amount should be indicated by a minus sign. $ What are the project's annual cash flows in Years 1, 2, and 3? Round your answers to the nearest cent. In Year 1 $ In Year 2…
You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $60,000, and it would cost another $9,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $27,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an $13,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $47,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 35%. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash flow? Enter your answer as a positive value. Round your answer to the nearest cent.$ What are the project's annual cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest cent.Year 1: $ Year 2: $ Year…
You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $130,000, and it would cost another $19,500 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $45,500. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an $15,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $72,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 35%. If the WACC is 13%, should the spectrometer be purchased?
You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $130,000, and it would cost another $19,500 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $45,500. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an $15,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $72,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 35%. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash flow? Enter your answer as a positive value. Round your answer to the nearest cent.
You must evaluate the purchase of a spectrometer for the R&D department. The base price is $140,000, and it would cost another $30,000 to modify the equpment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $60,000. The applicable depreciation rates are 33%, 45%, 15%, and 7% as discussed in Appendix 12A. The equipment would require an $8,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $50,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%. The firm's WACC ("hurdle rate" or "required rate of return") is 12% Question 12 Given the information in the problem: What is the project's Modified Internal Rate of Return (MIRR)? 12% ) 7.74% 1 6.03% 4.02%
You must evaluate the purchase of a spectrometer for the R&D department. The base price is $140,000, and it would cost another $30,000 to modify the equpment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $60,000. The applicable depreciation rates are 33%, 45%, 15%, and 7% as discussed in Appendix 12A. The equipment would require an $8,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $50,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%.
You must evaluate the purchase of a spectrometer for the R&D department. The base price is $140,000, and it would cost another $30,000 to modify the equpment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $60,000. The applicable depreciation rates are 33%, 45%, 15%, and 7% as discussed in Appendix 12A. The equipment would require an $8,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $50,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%. The firm's WACC ("hurdle rate" or "required rate of return") is 12%
You must evaluate the purchase of a spectrometer for the R&D department. The base price is $140,000, and it would cost another $30,000 to modify the equpment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $60,000. The applicable depreciation rates are 33%, 45%, 15%, and 7% as discussed in Appendix 12A. The equipment would require an $8,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $50,000 per year in
You must evaluate the purchase of a spectrometer for the R&D department. The base price is $140,000, and it would cost another $30,000 to modify the equipement for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $60,000. The applicable depreciation rates are 33%, 45%, 15%, and 7% as discussed in Appendix 12A. The equipment would require an $8,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $50,000 per year in before tax labor costs. The firms marginal federal plus state tax rate is 40%. The firms WACC is 12%. What is the inital investment outlay for the project? That is, what is the Year 0 project cash flow? What is the projects incremental depreciation for year 1? What is the projects annual cash flow for year 1? What is the projects annual cash flow for year 2? What is the projects incremental depreciation for year 3? What…