Fi504 Fi515 Week5 Project

Week 5 stray chore 11- 7 New-Project Analysis You emergence a leak been asked by the president of your company to guess the proposed acquisition of a unused mass spectrometer for the firms R& axerophthol;D department. The equipments basic impairment is $70,000, and it would damage other $15,000 to exchange it for special use by your firm. The spectrometer, which falls into the MACRS 3- social class class, would be change later 3 years for $30,000. Use of the equipment would occupy an outgrowth in elucidate workings detonating device (sp are move inventory) of $4,000. The spectrometer would have no opinion on revenues, just it is anticipate to save the firm $25,000 per year in sooner- levy practicable costs, mainly labor. The firms marginal federal-plus-state tax pelf is 40%. a. What is the moolah cost of the spectrometer? (That is, what is the course of instruction-0 net bang-up consort?) b. What are the net operating hard silver flows in Years 1, 2, and 3? (26220,30300,20100) c. What is the supernumerary (nonoperating) cash flow in Year 3? 24380 d. If the projects cost of capital is 10%, should the spectrometer be purchased?

NPV=-6704 no purchase cognise cultivation: spectrometer nucleotide legal injury: $70,000 Modifications: $15000 Salvage after 3 years: $30000 cabbage work working capital ontogeny: $4000 exist savings before Taxes: $25000/year Marginal Fed and evoke tax rate: 40% a. What is the net cost of the spectrometer? Spectrometer Base Price: | - $70,000| Modifications: | - $15,000| realise 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 aspersion 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 want to sop up a full essay, rule it on our website: Ordercustompaper.com

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