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Please solve in excel with formulas to diffrentiate where the numbers are coming from The president of your company, MorChuck Enterprises, has asked you to
Please solve in excel with formulas to diffrentiate where the numbers are coming from
The president of your company, MorChuck Enterprises, has asked you to evaluate the proposed acquisition of a new chromatograph for the firm's R\&D department. The equipment's pasic price is $77,000, and it would cost another $18,000 to modify it for special use by your firm. The chromatograph, which falls into the MACRS 3year class, would be sold after 3 years for $31,200. The MACRS rates for the first three years are 0.3333,0.4445 and 0.1481 . Use of the equipment would require an increase in net working capital (spare parts nventory) of $4,420. The machine would have no effect on revenues, but it is expected to save the firm $25,210 per year in before-tax operating costs, mainly labor. The firm's marginal federal-plus-state tax rate is 25%. Cash outflows and negative NPV value, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar. a. What is the Year-0 net cash flow? $ b. What are the project recurring cash flows in Years 1, 2, and 3? Year 1: Year 2: $ Year 3: $ c. What is the additional (nonoperating) cash flow in Year 3? $ d. If the project's cost of capital is 12%, what is the NPV of the project? $ Should the chromatograph be purchasedStep by Step Solution
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