P21-35 (book/static) E Question Help Dublin Chips is a manufacturer of prototype chips based in Buffalo, New York. (Click the icon to view the prototype chips information.) EE (Click the icon to view information on the options.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirements 1 and 2. Calculate the after-tax cash inflows and outlows of the modernize and replace alternatives over the 2018- 2024 period and calculate the net present value for each alternative. Let's begin with the modernize alternative. Start by computing the present value of the after-tax cash flows from operations, then calculate the present value of the after-tax cash savings from depreciation and the terminal disposal value, and finally, determine the total net present value (NPV) of the investment for the modernize altemative. (Round intermediary calculations and your final answers to the nearest whole dollar. Use a minus sign or parentheses for a negative present value of net cash flows.) Present Value of Cash Flows $ (35,300,000) Net Cash PV factor Inflow Net initial investment After-tax cash flows from operations Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 Dec 31, 2021 Enter any number in the edit fields and then click Check Answer. parts remaining Clear All Check Answer acturer of prototype chips based in Buffalo, New York. w the prototype chips information.) El (Click the icon to view information on the options,) Data Table alter The following data on the two options are available: Modernize Replace 0,000 66,300,000 S 7,500,000 16,000,000 7 years 66,000 Initial investment in 2018 S 35,30 Terminal disposal value in 2024 Useful life 7 years Total annual cash operating cost per prototype chip 78,500 Dublin Chips uses straight-ine depreciation, assuming zero terminal disposal value. For simplicity, we assume no change in prices or costs in future years. The investment will be made at the beginning of from 2018, and all transactions thereafter occur on the last day of the year. Dublin Chips' required rate of return is 14%. There is no difference between the modernize and replace alternatives in terms of required working capital, Dublin Chips pays a 35% tax rate on all income. Proceeds from sales of above book value are taxed at the same 35%rate. Print Done the edit fields and then click Check Answer Clear All Che More Info Next year, in 2018, Dublin Chips expects to deliver 615 prototype chips at an average price of $95,000. Dublin Chips marketing vice president forecasts growth of 65 prototype chips per year through 2024. That is, demand will be 615 in 2018, 680 in 2019, 745 in 2020, and so on. The plant cannot produce more than 585 prototype chips annually. To meet future demand, Dublin Chips must either modernize the plant or replace it. The old equipment is fully depreciated and can be sold for $4,200,000 if the plant is replaced. If the plant is modernized, the costs to modernize it are to be capitalized and depreciated over the useful life of the updated plant. The old equipment is retained as part of the modernize alternative Print Done s and then click Check Answer. Requirements Calculate the after-tax cash inflows and outflows of the modernize and replace alternatives over the 2018 2024 period. 1. 2. Calculate the net present value of the modernize and replace alternatives. 3. Suppose Dublin Chips is planning to build several more plants. It wants to have the most advantageous tax position possible. Dublin Chips has been approached by Spain, Malaysia, and Australia to construct plants in their countries. Briefly describe in qualitative terms the income tax features that would be advantageous to Dublin Chips. Print Done elds and then click Check Answer. Clear AlI P21-35 (book/static) E Question Help Dublin Chips is a manufacturer of prototype chips based in Buffalo, New York. (Click the icon to view the prototype chips information.) EE (Click the icon to view information on the options.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirements 1 and 2. Calculate the after-tax cash inflows and outlows of the modernize and replace alternatives over the 2018- 2024 period and calculate the net present value for each alternative. Let's begin with the modernize alternative. Start by computing the present value of the after-tax cash flows from operations, then calculate the present value of the after-tax cash savings from depreciation and the terminal disposal value, and finally, determine the total net present value (NPV) of the investment for the modernize altemative. (Round intermediary calculations and your final answers to the nearest whole dollar. Use a minus sign or parentheses for a negative present value of net cash flows.) Present Value of Cash Flows $ (35,300,000) Net Cash PV factor Inflow Net initial investment After-tax cash flows from operations Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 Dec 31, 2021 Enter any number in the edit fields and then click Check Answer. parts remaining Clear All Check Answer acturer of prototype chips based in Buffalo, New York. w the prototype chips information.) El (Click the icon to view information on the options,) Data Table alter The following data on the two options are available: Modernize Replace 0,000 66,300,000 S 7,500,000 16,000,000 7 years 66,000 Initial investment in 2018 S 35,30 Terminal disposal value in 2024 Useful life 7 years Total annual cash operating cost per prototype chip 78,500 Dublin Chips uses straight-ine depreciation, assuming zero terminal disposal value. For simplicity, we assume no change in prices or costs in future years. The investment will be made at the beginning of from 2018, and all transactions thereafter occur on the last day of the year. Dublin Chips' required rate of return is 14%. There is no difference between the modernize and replace alternatives in terms of required working capital, Dublin Chips pays a 35% tax rate on all income. Proceeds from sales of above book value are taxed at the same 35%rate. Print Done the edit fields and then click Check Answer Clear All Che More Info Next year, in 2018, Dublin Chips expects to deliver 615 prototype chips at an average price of $95,000. Dublin Chips marketing vice president forecasts growth of 65 prototype chips per year through 2024. That is, demand will be 615 in 2018, 680 in 2019, 745 in 2020, and so on. The plant cannot produce more than 585 prototype chips annually. To meet future demand, Dublin Chips must either modernize the plant or replace it. The old equipment is fully depreciated and can be sold for $4,200,000 if the plant is replaced. If the plant is modernized, the costs to modernize it are to be capitalized and depreciated over the useful life of the updated plant. The old equipment is retained as part of the modernize alternative Print Done s and then click Check Answer. Requirements Calculate the after-tax cash inflows and outflows of the modernize and replace alternatives over the 2018 2024 period. 1. 2. Calculate the net present value of the modernize and replace alternatives. 3. Suppose Dublin Chips is planning to build several more plants. It wants to have the most advantageous tax position possible. Dublin Chips has been approached by Spain, Malaysia, and Australia to construct plants in their countries. Briefly describe in qualitative terms the income tax features that would be advantageous to Dublin Chips. Print Done elds and then click Check Answer. Clear AlI