0 Sch thi Chapter 13. Project Cash Flow Homework Back to Assignment Allempts: Keep the Highest: /15 1. Problem 13-01 (Investment Outlay) eBook Investment Outlay Twbot Industries is considering launching a new product. The new manufacturing equipment will cost 519 million, and production and sales will require an initial $5 millon Investment in net operating working capital. The company's tax rates 40% a. What is the initial investment outlay? Enter your answer as a positive value. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your wiwer to the nearest dollar d B. The company sent and expensed $150,000 on research related to the new project styear would this change your answer last year's 5150,000 expenditure considered a sunk cost and represent an incremental cash now cather than bulda new manufacturing facility, the company plans to install the equament in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. How would this affect your answer? The project's cost will Back to Assignment Attempt Keep the Highest/15 2. Problem 13-02 (Project Cash Flow) ebook Project Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the rol-out of its new proposed service: Projected sales 524 million Operating costs (not including depreciation) $10 milion Depreciation S4 million Interest expense 54 min The company faces a 40% tax rate. What is the project's operating cash Bow for the first year (t-1) Enter your answer in dollars. For example, an answer of $1.2 million should be entered $1,200,000. Round your answer to the nearest dollar 5 ed 1 Video Excel Online Structured Activity: New project analysis You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $230,000, and it would cost another $46,000 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 $115,000. The applicable deprecation rates are 33%, 45%, 15%, and 7%. The equipment would require an $7,000 increase in net operating working capital (spare parts Inventory). The project would have no effect on revenues, but it should save the firm $52,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. X Open spreadsheet 2. What is the initial investment outlay for the spectrometer, that is, what is the Year O project cash flow? Round your answer to the nearest cent. Negative amount should be indicated by a minus sign. b. What are the project's annual cash flows in Years 1, 2 and 3? Round your answers to the nearest cent In Year 1$ In Year 25 In Year 35 if the WACC IS 14%, should the spectrometer be purchased