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Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $ 5 . 4 million. The
Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $ million. The equipment will be depreciated straightline over years to a value of zero, but in fact it can be sold after years for $ The firm believes that working capital at each date must be maintained at a level of of next years forecast sales. The firm estimates production costs equal to $ per trap and believes that the traps can be sold for $ each. Sales forecasts are given in the following table. The project will come to an end in years, when the trap becomes technologically obsolete. The firms tax bracket is and the required rate of return on the project is Use the MACRS depreciation schedule. Year: Thereafter Sales millions of traps What is project NPV Note: Do not round intermediate calculations. Enter your answer in millions rounded to decimal places. By how much would NPV increase if the firm uses doubledecliningbalance depreciated with a later switch to straightline when remaining project life is only two years? Note: Do not round intermediate calculations. Enter your answer in whole dollars not in millions.Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $ million. The equipment will be depreciated straightline over years to a value of zero, but in fact it can be sold after years for $ The firm believes that working capital at each date must be maintained at a level of of next year's forecast sales. The firm estimates production costs equal to $ per trap and believes that the traps can be sold for $ each. Sales forecasts are given in the following table. The project will come to an end in years, when the trap becomes technologically obsolete. The firm's tax bracket is and the required rate of return on the project is Use the MACRS depreciation schedule. Year: Sales millions of traps a What is project NPV Note: Do not round intermediate calculations. Enter your answer in millions rounded to decimal places. tableNPV$million b By how much would NPV increase if the firm uses doubledecliningbalance depreciated with a later switch to straightline when remaining project life is only two years? Note: Do not round intermediate calculations. Enter your answer in whole dollars not in millions.Notes: Tax depreciation is lower in the first year because assets are assumed to be in services for months. Real property is depreciation strightline over years for residential property and years for nonresidential property.
Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $ million. The equipment will be depreciated straightline over years to a value of zero, but in fact it can be sold after years for $ The firm believes that working capital at each date must be maintained at a level of of next years forecast sales. The firm estimates production costs equal to $ per trap and believes that the traps can be sold for $ each. Sales forecasts are given in the following table. The project will come to an end in years, when the trap becomes technologically obsolete. The firms tax bracket is and the required rate of return on the project is Use the MACRS depreciation schedule.
Year: Thereafter
Sales millions of traps
What is project NPV
Note: Do not round intermediate calculations. Enter your answer in millions rounded to decimal places.
By how much would NPV increase if the firm uses doubledecliningbalance depreciated with a later switch to straightline when remaining project life is only two years?
Note: Do not round intermediate calculations. Enter your answer in whole dollars not in millions.Better Mousetraps has developed a new trap. It can go into production for an initial investment in
equipment of $ million. The equipment will be depreciated straightline over years to a value of
zero, but in fact it can be sold after years for $ The firm believes that working capital at
each date must be maintained at a level of of next year's forecast sales. The firm estimates
production costs equal to $ per trap and believes that the traps can be sold for $ each. Sales
forecasts are given in the following table. The project will come to an end in years, when the trap
becomes technologically obsolete. The firm's tax bracket is and the required rate of return on
the project is Use the MACRS depreciation schedule.
Year:
Sales millions of traps
a What is project NPV
Note: Do not round intermediate calculations. Enter your answer in millions rounded to
decimal places.
tableNPV$million
b By how much would NPV increase if the firm uses doubledecliningbalance depreciated with
a later switch to straightline when remaining project life is only two years?
Note: Do not round intermediate calculations. Enter your answer in whole dollars not in
millions.Notes:
Tax depreciation is lower in the first year because assets are assumed to be in services for months.
Real property is depreciation strightline over years for residential property and years for nonresidential property.
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