Fi504 Fi515 Week5 Project

Week 5 project Problem 11- 7 New-Project depth psychology You take a leak been asked by the president of your confederacy to evaluate the proposed acquisition of a new mass spectrometer for the satisfyings R& axerophthol;D department. The equipments staple fiber price is $70,000, and it would price other $15,000 to modify it for special engagement by your wet. The spectrometer, which falls into the MACRS 3-year class, would be sold after 3 years for $30,000. Use of the equipment would occupy an increase in reform working detonating device (sp ar move inventory) of $4,000. The spectrometer would have no effect on revenues, just it is expected to save the family $25,000 per year in before- levy operational costs, mainly labor. The firms marginal federal-plus-state tax prize is 40%. a. What is the electronic network cost of the spectrometer? (That is, what is the course of instruction-0 net capital rate of spring?) b. What are the net operating cash flows in historic period 1, 2, and 3? (26220,30300,20100) c. What is the additional (nonoperating) cash flow in category 3? 24380 d. If the projects cost of capital is 10%, should the spectrometer be purchased?

NPV=-6704 no purchase Known finale: spectrometer Base Price: $70,000 Modifications: $15000 Salvage after 3 years: $30000 Net work enceinte increase: $4000 cost savings before Taxes: $25000/year Marginal Fed and severalise tax rate: 40% a. What is the net cost of the spectrometer? Spectrometer Base Price: | - $70,000| Modifications: | - $15,000| Net work Capital Increase: | - $4, 000| Total Net cash flow:| -$89,000| b.! What are the net operating cash flows in Years 1, 2, and 3? afterwards Tax = (25,000 * (1-0.40) = $15,000/year MARC 3-year Deprecation Rate = 33%, 45%, 15%, 7% c. What is the additional (non operating) cash flow in Year 3? d. If the projects cost of capital is 10%, should the spectrometer be purchased? Since the NPV is negative, reject the projectIf you unavoidableness to get a full essay, order it on our website: BestEssayCheap.com

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