Answered step by step
Verified Expert Solution
Question
1 Approved Answer
help asap Excel Online Structured Activity: New project analysis You must evaluate the purchase of a proposed spectrometer for the RBD department. The base price
help asap Excel Online Structured Activity: New project analysis You must evaluate the purchase of a proposed spectrometer for the RBD department. The base price is $90,000, and it would cost another $22,500 to modify the equipment for special use by the firm. The equipment falis into the MACRS 3 -year class and would be sold after 3 years for $31,500. The applicable depreciation rates are 33%,45%,15%, and 7%. The equipment would require an $8,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $35,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%. The data has been collected in the Microsoft Excel Online file below, Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 projec cash flow? Round your answer to the nearest cent. Negative amount should be indicated by a minus sign. 5 b. What are the project's annual cash flows in Years 1,2 , and 3 ? Round your answers to the nearest cent. In Year 15 In Year 2$ In Year 35 c. If the WACC is 11%, should the spectrometer be purchased
help asap
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started