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B and C please The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for
B and C please
The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firm's R&D department. The equipment's basic price is $190,000, and it would cost another $47,500 to modify it for special use by your firm. The chromatograph, which falls into the MACRS 3-year class would be sold after 3 years for $85,500. The MACRS rates for the first 3 years are 0.3333, 0.4445 and 0.1481. Use of the equipment would require an increase in net working capital (spare parts inventory) of $7,600. The machine would have no effect on revenues, but it is expected to save the firm $57,000 per year in before tax operating costs, mainly labor. The firm's marginal federal plus-state tax rate is 40% a. What is the Year o net cash flow? If the answer is negative, use parentheses 0 (245100) b. What are the net operating cash flows In Years 1, 2 and 37 Do not round Intermediate calculations. Round your answers to the nearest dollar Year 1 65863.50 Year 2 5 76427,50 Year 3 $ 48269.50 c. What is the additional (nonoperating) cash flow in Year 3 Do not roond Intermediate calculations. Round your antwer to the nearest dotat 72669.50 d. If the project's cost of capital is 13%, should the chromatograph be purchased? No Step by Step Solution
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