DataPoint Engineering is considering the purchase of a new piece of equipment for $220,000 it has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $120,000 in nondepreciable working capital. $30,000 of this investment will be recovered after the sixth year and will provide additional cash flow for that year income before depreciation and taxes for the next six are shown in the following table. Use Table 12-11. Table 12-12. Use Append 8 for an approximate answer but calculate your final answer using the formula and financial calculatot methods The tax rate is 25 percent Tne cost of capial must be compited based on the fol owing: a. Determine the annual depreciation schedule. Do not round intermediate calculations. Round your depreciation base and annual depreciation answers to the nearest whole dollor. Round your percentoge depreciotion answers to 3 decimol places.) b. Determine the annual cash flow for each year. Be sure to include the recovered working capital in Year 6 . (Do not round intermediate calculations and round your answers to 2 decimol places.) c. Deteimine the weighted average cost of capital. (Do not round intermediote colculatlons, Enter your onswer as o percent rounded to 2 decimol ploces.) c. Determine the weighted average costof capital (Do not round intermediate colculations. Enter your onswer as o percent rounded to 2 decimol ploces.) d-1. Determine the netpreson volge (Use the WACC from phrt c rounded to 2 decimal ploces os a percent os the cost of copital (e.g. 12.34N). Do notround any other Intermediote colculotions. Round your ansyer to 2 decimal piaces.) d-1. Determine the net present value. (Use the WACC from part c rounded to 2 decimal ploces as a percent as the cost of capital (e.9. 12.34\%). Do not round ony other intermediate calculations. Round your answer to 2 decimal places.) d.2. Snould DataPoint buichase the new equipment? Mes. No DataPoint Engineering is considering the purchase of a new plece of equipment for $220,000 it tias an eight-year midpoint of its asset depreciation range (ADR). It will require an additional intial investment of $120,000 in nondepreciable working capital $30,000 of this investment wil be recovered after the sixth year and will provide additional cash llow toc that year Income before depreciation and ?axes for the next six are shown in the following table. Use Jable 1211. Fable 12-12 Use Angendix-8 for an apploximate answer but calculate your final answer using the formula and financtal calculator methods The, arkrate 125 percent The cost of capital mast be computed bosed on the foltovang The tax rate is 25 percent. The cost of capital must be computed based on the follov Determine the annual depreciation schedule (Do not round intermediate calculations. Round your depreciation bose and annual depreciation answers to the nearest whole dollar. Round your percentoge depreciation answers to 3 decimal places.) b. Determine the annual cash flow for each year. Be sure to include the recovered working capital in Year 6 . (Do not round intermediate calculations ond round your onswers to 2 decimal ploces.) c. Determine the weighted average cost of capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) d-1. Determine the net present value. (Use the WACC from port c rounded to 2 decimal places os a percent a the cost of capital (e.g. 12.34\%), Do not round any other intermediate colculotions. Round your answer to 2 decimol places.) d-1. Determine the net presentvalue. (Use the WACC from port c rounded to 2 decimol ploces as o percent as the cost of capital (e.g., 12.34\%). Do not round ony other intermediote calculotions. Round your onswer to 2 decimal ploces.) d.2. Should Datapointysuchose the oe wedripmear? DataPoint Engineering is considering the purchase of a new plece of equipment for $220.000. it has an eight-year midpoint of its asset depreciation range (ADR) it willequite an additional initial investment of $120,000 in nondepreciable working capital. $30,000 of this investment will be recovered aiter the sixth year and will provide additional cash flow for that year Income before depreciation and taxes for the next six are shown in the following table. Use Table 12-11. Table 12-12 Use Apoencix \& for an approximate answer but calculate your final answer using the formula and financial calculator methods: The tax fate is 25 percent the cost of capial must be computed based on the following The tax rate is 25 percent. The cost of capital must be computed based on the following: o. Determine the annual depreciation schedule (Do not round intermediate colculations. Round your depreciation bose and annuol depreciation answers to the neorest whole dollar. Round your percentage depreciation answers to 3 decimal places.) b. Determine the annual cash flow for each year. Be sure to include the recovered working capital in Year 6 . (Do not round intermediate calculations and round your answers to 2 decimal places.) c. Determinethe weghved average costoficapita (Do not round intermediate colculations, Enter your answer as a percent Determine the weighted average cost of capital. (Do not round intermediate calculations. Enter your onswer as a percent ounded to 2 decimal places.) d-1. Determine the net present value. (Use the WACC from part rounded to 2 decimal places as a percent as the cost of capital (e.9. 12.34% ). Do not round any other intermediote calculations. Round your answer to 2 decimol ploces.) 1. Determine the net present value. (Use the WACC from port c rounded to 2 decimol places as a percent as the cost of capital e.9., 12,34\%). Do not round any other intermediote coleulations. Round your onswer to 2 decimol ploces.) d.2. Should Datafoint purchase the new equipinent? Table 12-11 Categorles for depreclation write-off Class 3-year MACRS All property with ADR midpoints of four years or less. Autos and light trucks are excluded from this category. 5-year MACRS Property with ADR midpoints of more than 4, but less than 10 years. Key assets in this category include automobiles, light trucks, and technological equipment such as computers and research-related propertles. 7-year MACRS Property with ADR midpoints of 10 years or more, but less than 16 years. Most types of manufacturing equipment would fall into this category, as would oflice furniture and fixtures. 10-year MACRS Property with ADR midpoints of 16 years or more, but less than 20 years. Petroleum refining products, railroad tank cars, and manufactured homes fall into this group. 15-year MACRS Property with ADR midpoints of 20 years or more, but less than 25 years. Land improvement, pipeline distribution, telephone distribution, and sewage treatment plants all belong in this category. 20-year MACAS Property with ADR midpoints of 25 years or more (with the exception of real estate, which is treated separately. Key investments in this category include electric and gas utility property and sewer pipes. 27.5-year Residential rental property if 80% or more of the gross rental income is. MACRS from nontransient dwelling units (e.g., an apartment building): lowincome housing. 31.5-year Nonresidential real property that has no ADA class life or whose class MACRS: life is 27.5 years or more. 39-year MACRS Nonresidentlal real property placed in service after May 12, 1993. able 12 .12 Danmolation nercentagess (expressed in decimals) Appenda B Present value of 51,PV,PV u FV[[[i+1)] DataPoint Engineering is considering the purchase of a new piece of equipment for $220,000. It has depreciation range (ADR). It will require an additional initial investment of $120,000 in nondepreciabl investment will be recovered after the sixth year and will provide additional cash flow for that year. In taxes for the next six are shown in the following table. Use Table 12-11. Table 12-12. Use Appendix B calculate your final answer using the formula and financial calculator methods. chase of a new piece of equipment for $220,000. It has an eight-year midpoint of its asset dditional initial investment of $120,000 in nondepreciable working capital. $30,000 of this ear and will provide additional cash flow for that year. Income before depreciation and ing table. Use Table 12-11. Table 12-12. Use Appendix 8 for an approximate answer but and financial calculator methods. DataPoint Engineering is considering the purchase of a new piece of equipment for $220,000. depreciation range (ADR). It will require an additional initial investment of $120,000 in nondepr investment will be recovered after the sixth year and will provide additional cash flow for that y taxes for the next six are shown in the following table. Use Table 12-11, Table 12-12. Use Appen calculate your final answer using the formula and financial calculator methods. The tax rate is 25 percent. The cost of capital must be computed based on the following: o. Determine the annual depreciation schedule (Do not round intermediate calculotions. Round your depreciation base ond annue depreciation answers to the nearest whole dollar. Round your percentage depreciation answers to 3 decimal places.) b. Determine the annual cash flow for each year. Be sure to incluge the recovered working capital in year 6 . (Do not round intermediate calculations and round your onswers to 2 decimal places.) Determine the weighted average cost of capital. (Do not round intermediate calculations. Enter your answer as o percent ounded to 2 decimal places. d-1. Determine the nethipsent Nalue. (Use the WACC from port *rounded to 2 decimal places os o percent os the cost of capital (e.. 12.34\%), Do not round ony other intermediate calculotions. Round your onswer to 2 decimol places.) 1-1. Determine the net present value. (Use the WACC from part c rounded to 2 decimal places as a percent as the cost of capital e.9., 12.34\%). Do not round any other intermediate calculations. Round your onswer to 2 decimal places.) d-2. Should DataPoint purchase the new equipment