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Saved Help Save & Ex 11 Check Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $6,900 and sell its old washer for $2,100. The new washer will last for 6 years and save $1,900 a year in expenses. The opportunity cost of capital is 18%, and the firm's tax rate is 21% points a. If the firm uses straight-line depreciation over a 6-year life, what are the cash flows of the project in years 0 to 6? The new washer Skipped sign.) will have zero salvage value after 6 years, and the old washer is fully depreciated. (Negative amounts should be indicated by a minus b. What is project NPV? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What is NPV if the firm investment is entitled to immediate 100% bonus depreciation? (Do not round intermediate calculations. Book Round your answer to 2 decimal places.) Print Annual operating cash flow in year 0 a. Annual operating cash flow in years 1 to 6 b. NPV NPV 11 of 15 Me Prev 12 of 15 Next L O Ei Type here to searchSaved Help Save & Exi 9 Check Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $5.4 million. The equipment will be depreciated straight line over 6 years to a value of zero, but in fact it can be sold after 6 years for $527,000. The firm believes that working capital at each date must be maintained at a level of 10% of next year's forecast sales. The firm estimates ints production costs equal to $1.10 per trap and believes that the traps can be sold for $5 each. Sales forecasts are given in the following table. The project will come to an end in 6 years, when the trap becomes technologically obsolete. The firm's tax bracket is 35%, and Skipped the required rate of return on the project is 9%. Use the MACRS depreciation schedule. Year : 2 3 4 5 6 Thereafter Sales (millions of traps) 0.5 0.7 0.9 0.9 0.6 0.4 e Book Print a. What is project NPV? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions rounded to 4 decimal places.) NPV million b. By how much would NPV increase if the firm depreciated its investment using the 5-year MACRS schedule? (Do not round intermediate calculations. Enter your answer in whole dollars not in millions.) The NPV increases by 9 of 15 Next >