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I filled in a few of the requirements and calculated the MACRS depreciation. I need help filling in the remaining blanks, any explanation is greatly
I filled in a few of the requirements and calculated the MACRS depreciation. I need help filling in the remaining blanks, any explanation is greatly appreciated. Thank you! Info and table provided.
Ch 12 Problem #9: You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 2 3-year class, and it will be sold after three years for $20,000. Use of the truck will require an increase in NWC (spare parts inventory) of $2,000. The truck will have no effect on revenues, but it is expected to save the firm $20,000 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 40 percent, an opportunity cost of capital of 8 percent. What will the cash flows for this project be? Ch 12.9 Deliverable (100 total points): Complete the Ch 12 Problem #9 Excel worksheet and answer the following questions (50 points). Q.3 What will the cash flows for this project be? (25 points) Q.4 According to the Management Report, should KADS go forward with the project? (25 points) Explain you answers in detail using the Capital Budgeting key topic and tools in Ch 13 and Ch 13 from the M: Finance textbook readings. NPV - Investment Analysis Cost of Equipment $0 $0 Management Summary Initial Investment Basis $0 NPV at 0% $0 Cost of Installation $60,000 IRR 0.0% First year change in revenue Discount Rate Revenues increase/decrease each year at: 0.0% MIRR 0.0% Reinvestment Rate (for MIRR) $60,000 $0.00 First year change in expenses Tax Rate 40% P.I. 24 3.00 0.0% Working Capital Commitment 2,000 Payback Disc Payback Expenses increase/decrease each year at: $0 2$ 20,000 3.00 1st-Yr Cannibalization of Other Revenues Sell Equipment at End of Project 0.0% Annual Cannibalization Increase/DecreaseStep by Step Solution
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