Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help on hw ill leave a like! New-Project Analysis The president of the company you work for has asked you to evaluate the proposed
please help on hw ill leave a like!
New-Project Analysis The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograp or the firm's R\&D department. The equipment's basic price is $120,000, and it would cost another $18,000 to modify for special use by your firm. The chromatograph, which falls into the MACRS 3-year class, would be sold after 3 years f $30,000. The MACRS rates for the first 3 years are 0.3333,0.4445 and 0.1481. Use of the equipment would require an increase in net working capital (spare parts inventory) of $6,000. The machine would have no effect on revenues, but it expected to save the firm $48,000 per year in before-tax operating costs, mainly labor. The firm's marginal federal-plus state tax rate is 35%. a. What is the Year 0 net cash flow? If the answer is negative, use parentheses. b. What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar. Year 1 Year 2. Year 3 c. What is the additional (nonoperating) cash flow in Year 3 ? Do not round intermediate calculations. Round your answer to the nearest dollar. d. If the proiect's cost of capital is 14%, should the chromatograph be purchased Step 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