not sure how to solve part a and b. work is supposed to be shown on excel. please show all calculations/work
Computer-Aided Machining Company plans to invest in a state- of-the-art 5-axis machining center with invoice price of $450,000, freight of $25,000, site preparation $40,000, and installation costs of $35,000. The project also requires special tooling costing $50,000. The machining center has an expected life of ten years and the tooling only 5 years so tooling replacement is needed after the fifth year. The machining center is a 7-year depreciable asset and the tooling is a 3-year class. After it's useful life, the machining center is salvaged for $50,000 and the tooling is scrapped for $1500. The company expects to increase its annual production revenues by $400,000 with associated annual production costs of $45,000 direct materials, $75,000 direct labor, and $37,500 manufacturing overhead. Taxes are assessed at a 35% rate on taxable income The company has decided to take an eight-year loan of $300,000 at 6% to help defray cash outlay and to establish working capital of $70,000. a) Develop the Income Statement and Cash Flow Statement covering the 10-year timeframe subject to 2% inflation with final cash flows expressed in Actual Dollars and then Constant Dollars. b) Determine the Present Worth of the project using a minimum attractive rate of return (MARR) of 15%. Computer-Aided Machining Company plans to invest in a state- of-the-art 5-axis machining center with invoice price of $450,000, freight of $25,000, site preparation $40,000, and installation costs of $35,000. The project also requires special tooling costing $50,000. The machining center has an expected life of ten years and the tooling only 5 years so tooling replacement is needed after the fifth year. The machining center is a 7-year depreciable asset and the tooling is a 3-year class. After it's useful life, the machining center is salvaged for $50,000 and the tooling is scrapped for $1500. The company expects to increase its annual production revenues by $400,000 with associated annual production costs of $45,000 direct materials, $75,000 direct labor, and $37,500 manufacturing overhead. Taxes are assessed at a 35% rate on taxable income The company has decided to take an eight-year loan of $300,000 at 6% to help defray cash outlay and to establish working capital of $70,000. a) Develop the Income Statement and Cash Flow Statement covering the 10-year timeframe subject to 2% inflation with final cash flows expressed in Actual Dollars and then Constant Dollars. b) Determine the Present Worth of the project using a minimum attractive rate of return (MARR) of 15%
