Question
Please show calculation in excel. A semiconductor company is considering a purchase of a silicon measurement system costing $500,000. By reducing wasted Silicon, the system
Please show calculation in excel.
A semiconductor company is considering a purchase of a silicon measurement system costing $500,000. By reducing wasted Silicon, the system is expected to save approximately $100,000 per year in raw material costs. The system costs $25,000 to install. The device would reduce approximately 40 hours of work per week provided by an outsourcing service charged at $40 per hour. Assume there are 52 weeks in a year. The company is expecting to upgrade the entire plant in 3 years at which time they expect to dispose of the equipment. They estimate that they would receive $25,000 for the equipment. The equipment is to be depreciated on a straight line basis over 3 years. The discount rate of the firm is 10%. (a) Assume no taxes. What is the total cash ow generated by this project in year 0? (b) Assume no taxes. What is the total cash ow generated by this project in year 1? (c) Assume no taxes. What is the total cash ow generated by this project in year 3? (d) Assume no taxes. What is the Net Present Value of the measurement system? (e) Suppose now the corporate tax rate is 35%. What is the total cash ow generated by this project in year 0? (f) Suppose now the corporate tax rate is 35%. What is the total cash ow generated by this project in year 1? (g) Suppose now the corporate tax rate is 35%. What is the total cash ow generated by this project in year 3? (h) Suppose now the corporate tax rate is 35%. What is the Net Present Value of the measurement system?
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