Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please answer in EXCEL FORMULAS Example #3 New Project Analysis You have been asked by the president of the Farr Construction Company to evaluate the
please answer in EXCEL FORMULAS
Example \#3 New Project Analysis You have been asked by the president of the Farr Construction Company to evaluate the proposed acquisition of a new earth mover. The mover's basic price is $50,000 and it would cost another $10,000 to modify it for special use. Assume that the mover has a MACRS 3-year recovery period. It would be sold after 4 years for $20,000 and it would require an increase in net working capital (spare parts inventory) of \$2,000. The earth mover would have no effect on revenues, but it is expected to save the firm $20,000 per year in before-tax operating costs, mainly labor. The firm's marginal federal-plus-state tax rate is 40 percent. #21 is taken from this handout. On page 7 of the handout, do example \#3, as follows: part A - calculate the initial cash flow part B - calculate all of the operating cash flows part C - calculate the terminal cash flow part D - calculate BOTH the net present value (NPV) and the internal rate of return (IRR). Base your investment decision on BOTH the NPV and the IRRStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started