Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

im unsure how to fill out this table. please help! AutoSave H. FINI FOF Assignment Search Michael Nikolovski File Home Insert Drow Page Layout Formulas

im unsure how to fill out this table. please help!
image text in transcribed
image text in transcribed
AutoSave H. FINI FOF Assignment Search Michael Nikolovski File Home Insert Drow Page Layout Formulas Data Review View Help Shape Format X lb- Calibri (Body Insert waste BTUDS -A A 25 Wrap Text - A - EEE Merge & Center Alignment 27 $ - % *88-28 Conditional Formatas Cell Formatting Table Styles Format Sonte Filters pboard Font Number Cells ectangle 1 - f PART 2 - PROJECT EVALUATION 1 2 3 4 WACC: 7.65% Year Opening Book Value less Depreciation Closing Book Value Tax Rate: 30.0% Revenue and expenses Round off all dollar values below to the nearest whole number. All expenses and cash outflows must be negative numbers. (Read the Important Note to the right.) 1 2 3 4 Student No. Balance Sheet Online Data Credit Spreads Project Info Part Part 2 FIN1FOF- FUNDAMENTALS OF FINANCE - ASSIGNMENT Project Information The equipment will cost $740, is expected to have a working life of 4 years, and will be depreciated on a diminishing-value basis to a book value of zero. The equipment is expected to have a salvage value of $150 at the end of 4 years. The new equipment will improve efficiency and result in increased revenue of $870 in its first year of operation, but because of reduced efficiency from normal wear and tear, revenue will decrease by 8% (from the previous year's revenue) for each of the remaining 3 years of the equipment's life. Excluding maintenance, all other costs from operating the equipment will be $220 per year. Maintenance costs will amount to $110 in the equipment's first year of operation, and will then increase by $20 per year for the remaining 3 years of the equipment's life. The equipment will require additional net working capital of $110. The net working capital will be recovered in full after the equipment is sold at the end of its working life. The equipment will be installed in a building that is owned by the company, but currently is not being used. If the project does not proceed, this building could be rented out for $110 per year. A feasibility study has been undertaken into the purchase of the new equipment. The cost of preparing the feasibility study was $300. The company has sufficient capital to undertake all positive-NPV projects. If the Payback Period method is used to evaluate projects, management's policy is that the maximum acceptable payback period is 3 years, and all cash flows in Year Owould need to be recovered within 3 years for the project to be acceptable under this method

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Students also viewed these Accounting questions