Please answer 14.7, Thanks!

Chapter 14: The Basics of Capital Budgeting ment falls into the MACRS five-year class for tax Proiect X ProjecrY The equ is subject to the following depreciation allowances o (s10,000)($10,0001 3,000 3,000 3,000 1,000 0.20 2 0.32 3 0.19 40.12 5 0.11 0.06 1.00 3,000 3,000 a. Calculate each project's payback period, n net present value (NPV), and internal rate of return (IRR). b. Which project (or projects) is finan ansiwer. 14.6 The direcror of capital budgeting for Big Sky He Hcalth Systems, Inc. rate is 40 percent, and its corporatc cost of capi has estimared the following cash flows in thous proposed new scrvice: tal is 10 percenc Expected Ner Cash Flow (S100) re the project's net cash flows over its five year estimated int: Use the following format as a guide.) 70 Year 20 rs Labor/maintenance costs cOsDS Net reseaues The project's cost of capital is 10 percent. a. What is the project's payback period? b. What is the project's NPV? c. What is the project's IRR? Its MIRR? pplesrhe Incremental overhead Depreciation 14.7 California Health Center, a for profit hospital, s evalu is evaluating purchase of new diagnostic equipment. The equipment, wlih axes costs S600,000, has an expected lifc of five years and an e salvage value of $200,000 at that time. The equipmentis Net operaring income Pls: Depreciation plus: Equipment salvage value Ner cash flow to be used 15 times a day for 250 days a year for cach year of the project's life. On average, each procedure is expected to gcnezaze $80 in collections, which is net of bad debt losses and contracrul allowances, in its first year of use. Thus, net revenues for Year l ir estimated at 15 x 250 x $80 $300,000. b. What are the project's NPV and IRR: (Assume for now that the project has average risk.) Labor and maintenance costs are expected to be S100,000 14.8 You have been asked by the president and CEO of Kidd during the first year of operation, while utilitics will cost another $10,000 and cash overhead will increase by 85,000 in Year 1. The cost for expendable supplies is expected to avcrage $5 per proce- dure during the first year. All costs and revenues, except deprecia tion, are expected to increase at a 5 percent inflation rate after tie Pharmaccuticals to evaluate the proposed acquisition of a new labeling machine for one of the firm's production lines. The machine's price is $50,000, and it would cost another $10,000 for transportation and installation. The machine falls into the MACRS three-year class, and hence the tax depreciation allowances are 0.33, 0.45, and 0.15 in years 1, 2, and 3, respectively. The machine first year. Chapter 14: The Basics of Capital Budgeting ment falls into the MACRS five-year class for tax Proiect X ProjecrY The equ is subject to the following depreciation allowances o (s10,000)($10,0001 3,000 3,000 3,000 1,000 0.20 2 0.32 3 0.19 40.12 5 0.11 0.06 1.00 3,000 3,000 a. Calculate each project's payback period, n net present value (NPV), and internal rate of return (IRR). b. Which project (or projects) is finan ansiwer. 14.6 The direcror of capital budgeting for Big Sky He Hcalth Systems, Inc. rate is 40 percent, and its corporatc cost of capi has estimared the following cash flows in thous proposed new scrvice: tal is 10 percenc Expected Ner Cash Flow (S100) re the project's net cash flows over its five year estimated int: Use the following format as a guide.) 70 Year 20 rs Labor/maintenance costs cOsDS Net reseaues The project's cost of capital is 10 percent. a. What is the project's payback period? b. What is the project's NPV? c. What is the project's IRR? Its MIRR? pplesrhe Incremental overhead Depreciation 14.7 California Health Center, a for profit hospital, s evalu is evaluating purchase of new diagnostic equipment. The equipment, wlih axes costs S600,000, has an expected lifc of five years and an e salvage value of $200,000 at that time. The equipmentis Net operaring income Pls: Depreciation plus: Equipment salvage value Ner cash flow to be used 15 times a day for 250 days a year for cach year of the project's life. On average, each procedure is expected to gcnezaze $80 in collections, which is net of bad debt losses and contracrul allowances, in its first year of use. Thus, net revenues for Year l ir estimated at 15 x 250 x $80 $300,000. b. What are the project's NPV and IRR: (Assume for now that the project has average risk.) Labor and maintenance costs are expected to be S100,000 14.8 You have been asked by the president and CEO of Kidd during the first year of operation, while utilitics will cost another $10,000 and cash overhead will increase by 85,000 in Year 1. The cost for expendable supplies is expected to avcrage $5 per proce- dure during the first year. All costs and revenues, except deprecia tion, are expected to increase at a 5 percent inflation rate after tie Pharmaccuticals to evaluate the proposed acquisition of a new labeling machine for one of the firm's production lines. The machine's price is $50,000, and it would cost another $10,000 for transportation and installation. The machine falls into the MACRS three-year class, and hence the tax depreciation allowances are 0.33, 0.45, and 0.15 in years 1, 2, and 3, respectively. The machine first year