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Please show work and answer these 8 questions. (Finance) 1) The Campbell Company is considering adding a robotic paint sprayer to its production line. The

Please show work and answer these 8 questions. (Finance)image text in transcribed

1) The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,080,000, and it would cost another $22,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $605,000. The machine would require an increase in net working capital (inventory) of $1 5,500. The sprayer would not change revenues, but it is expected to save the firm $380,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 35%. What is the Non- Operating cash flow for year 3? a. 714,528.36 b. 512,364.50 c. 274,236.85 d. 437,343.34 2) McConachie Company is considering the purchase of a new 400-ton stamping press. The press costs $360,000, and an additional $40,000 is needed to install it. The press will be depreciated straight-line to zero over a five-year life. The press will generate no additional revenues, but it will reduce cash operating expenses by $140,000 annually. The press will be sold for $120,000 after five years. An inventory investment of $60,000 is required during the life of the investment. McConachie is in the 40 percent tax bracket. The required return is 10%. What is CF5? a. 154,000 b. 116,000 c. 248,000 d. 132,000 3) McConachie Company is considering the purchase of a new 400-ton stamping press. The press costs $360,000, and an additional $40,000 is needed to install it. The press will be depreciated straight-line to zero over a five-year life. The press will generate no additional revenues, but it will reduce cash operating expenses by $140,000 annually. The press will be sold for $120,000 after five years. An inventory investment of $60,000 is required during the life of the investment. McConachie is in the 40 percent tax bracket. The required return is 10%. What is the NPV of the project? a. -74,256 b. 42,185 c. -15,365 d. 61,693 4) DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $1 35,000. The old machine is being depreciated by $90,000 per year, using the straight-line method. The new machine has a purchase price of $775,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 1 9.20%, 11 .52%, 11 .52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, an annual savings of $185,000 will be realized if the new machine is installed. The company's marginal tax rate is 35%, and it has a 1 2% WACC. What is CF0? a. -529,750 b. -775,000 c. -625,500 d. -495,500 5) DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $1 35,000. The old machine is being depreciated by $90,000 per year, using the straight-line method. The new machine has a purchase price of $775,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 1 9.20%, 11 .52%, 11 .52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, an annual savings of $185,000 will be realized if the new machine is installed. The company's marginal tax rate is 35%, and it has a 1 2% WACC. What is CF2? a. 185,450 b. 210,250 c. 175,550 d. 145,360 6) DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $1 35,000. The old machine is being depreciated by $90,000 per year, using the straight-line method. The new machine has a purchase price of $775,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 1 9.20%, 11 .52%, 11 .52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, an annual savings of $185,000 will be realized if the new machine is installed. The company's marginal tax rate is 35%, and it has a 1 2% WACC. What is the non-operating cash flow for year 5 ? a. 47,365 b. 0 c. 105,000 d. 83,874 7) DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $1 35,000. The old machine is being depreciated by $90,000 per year, using the straight-line method. The new machine has a purchase price of $775,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 1 9.20%, 11 .52%, 11 .52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, an annual savings of $185,000 will be realized if the new machine is installed. The company's marginal tax rate is 35%, and it has a 1 2% WACC. What is CF5 a. 252,360 b. 119,998 c. 185,236 d. 203,872 8) DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $1 35,000. The old machine is being depreciated by $90,000 per year, using the straight-line method. The new machine has a purchase price of $775,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 1 9.20%, 11 .52%, 11 .52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, an annual savings of $185,000 will be realized if the new machine is installed. The company's marginal tax rate is 35%, and it has a 1 2% WACC. What is the NPV of the project? a. 14,360 b. -1,525 c. 30,059 d. 25,184

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