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Integrative: Complete Investment decision Wells Printing is considering the purchase of a new printing press. The total installed cost of the press is $ 2
Integrative: Complete Investment decisionWells Printing is considering the purchase of a new printing press. The total installed cost of the press is $ million. This outlay would be partially offset by the sale of an existing press. The old press has zero book value, cost $ million years ago, and can be sold currently for $ million before taxes. As a result of acquisition of the new press, sales in each of the next years are expected to be $ million higher than with the existing press, but product costsexcluding depreciation will represent of sales. The new press will not affect the firm's net working capital requirements. The new press will be depreciated under MACRS LOADING... using a fiveyear recovery period. The firm is subject to a tax rate. Wells Printing's cost of capital is Note: Assume that the old and the new presses will eachhave a terminal value of $ at the end of year a Determine the initial cash flow required by the new press. PLEASE INCLUDE THE FOLLOWING Installed cost of new press Proceeds from sale of existing press Taxes on sale of existing press Total aftertax proceeds from sale Initial cash flow b Determine the periodic cash inflows attributable to the new press. Calculate the periodic cash inflows attributable to the new press below: INCLUDE THE FOLLOWING FOR YEARS Revenues Expenses Depreciation Net profits before taxes Taxes Net profit after taxes Operating cash inflowsNote: Be sure to consider the depreciation in c Determine the payback period. d Determine the net present value NPV and the internal rate of return IRR related to the proposed new press. e Make a recommendation to accept or reject the new press, and justify your answer. ALL PERCENTAGES AND MACRS INCLUDED IN SCREENSHOT ATTACHED. a Determine the initial cash flow required by the new press. Click on the icon here in order to copy the contents of the data table below into a spreadsheet. Calculate the initial cash flow will be: Round to the nearest dollar. Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Installed cost of new press
Integrative: Complete Investment decisionWells Printing is considering the purchase of a new printing press. The total installed cost of the press is $ million. This outlay would be partially offset by the sale of an existing press. The old press has zero book value, cost $ million years ago, and can be sold currently for $ million before taxes. As a result of acquisition of the new press, sales in each of the next years are expected to be $ million higher than with the existing press, but product costsexcluding depreciation will represent of sales. The new press will not affect the firm's net working capital requirements. The new press will be depreciated under MACRS LOADING... using a fiveyear recovery period. The firm is subject to a tax rate. Wells Printing's cost of capital is Note: Assume that the old and the new presses will eachhave a terminal value of $ at the end of year
a Determine the initial cash flow required by the new press. PLEASE INCLUDE THE FOLLOWING Installed cost of new press Proceeds from sale of existing press Taxes on sale of existing press Total aftertax proceeds from sale Initial cash flow
b Determine the periodic cash inflows attributable to the new press. Calculate the periodic cash inflows attributable to the new press below: INCLUDE THE FOLLOWING FOR YEARS Revenues Expenses Depreciation Net profits before taxes Taxes Net profit after taxes Operating cash inflowsNote: Be sure to consider the depreciation in
c Determine the payback period.
d Determine the net present value NPV and the internal rate of return IRR related to the proposed new press.
e Make a recommendation to accept or reject the new press, and justify your answer. ALL PERCENTAGES AND MACRS INCLUDED IN SCREENSHOT ATTACHED.
a Determine the initial cash flow required by the new press.
Click on the icon here in order to copy the contents of the data table below into a spreadsheet.
Calculate the initial cash flow will be: Round to the nearest dollar.
Rounded Depreciation Percentages by Recovery Year Using MACRS for
First Four Property Classes
Percentage by recovery year
Installed cost of new press
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