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please answer all required parts, thank you! A firm is considering the purchase of a new machine at a price of $135,000. The machine falls
please answer all required parts, thank you!
A firm is considering the purchase of a new machine at a price of $135,000. The machine falls into the three-year MACRS class. If the new machine is acquired, the firm's investment in net working capital will immediately increase by $10,000 and then remain at that level throughout the life of the project. At the end of 3 years, the new,machine can be sold for $16,000. Earnings before depreciation, interest and taxes (EBDIT) are expected to be as follows with respect to the new machine: Year 1: EBDIT =$58,000 Year 2: EBDIT =$75,000 Year 3: EBDIT =$85,000 The firm is subject to a 21 percent tax rate and the firm's discount rate is 9 percent. Requirement 1: Calculate the missing data in the table below for each year over the life of this project. (Do not round intermediate calculations. Round your answers to the nearest whole dollar (e.g., 32).) Requirement 2: What is the book value of the machine at the end of Year 3 ? (Do not round intermediate calculations. Round your answer to the nearest whole dollar (e.g., 32).) Requirement 3: Calculate the taxes related to the sale of the asset at the end of the project and the aftertax salvage value of the machine. (Do not round intermediate calculations. Net tax savings should be indicated by a minus sign. Round your answer to the nearest whole dollar le.a.. 321.) What is the book value of the machine at the end of Year 3 ? (Do not round intermediate calculations. Round your answer to the nearest whole dollar (e.g., 32).) Requirement 3: Calculate the taxes related to the sale of the asset at the end of the project and the aftertax salvage value of the machine. (Do not round intermediate calculations. Net tax savings should be indicated by a minus sign. Round your answer to the nearest whole dollar (e.g., 32).) Requirement 4: What is the net cash flow of the project for each of the following years? (Do not round intermediate calculations. Net cash outflows should be indicated by a minus sign. Round your answers to the nearest whole dollar (e.g., 32).) Requirement 5 : What is the NPV of the project? (Enter rounded answier as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Step by Step Solution
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