Question
DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be $139,000. The firm
DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be $139,000. The firm has a chance to sell its 4-year-old roaster for $35,800. The existing roaster originally cost $60,900 and was being depreciated using MACRS and a 7-year recovery period. DuPree is subject to a 40 % tax rate.
Anticipated Changes in Current Assets and Current Liabilities | |
Accruals | $19,100 |
Inventory | 50,700 |
Accounts payable | 39,400 |
Accounts receivable | 70,700 |
Cash | 0 |
Notes payable | 14,500 |
a. The remaining book value of the existing roaster is
b. The after-tax proceeds of the sale of the existing roaster will be
c. The change in net working capital will be
d. The initial investment associated with the proposed new roaster will be
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