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please solve these both A firm is considering invosting in a new pioco of equpment. The equipment would cost $500,000 and would have shipping and
please solve these both
A firm is considering invosting in a new pioco of equpment. The equipment would cost $500,000 and would have shipping and installaton cost of $125,000. If purchased, the machine would have an estmated usatul lite of 5 years and would be doprecialed via a 5.year MACRS schodulo (0.0,20.0%,32.0%,19.2%,11.5%,11.5%, and 5.8%). Adoption of the project would also require an increase in working capital of $50,000. If the new equipment is purchased, an old plece of equipment (which is s!ill useable for 5 more years) could be sold for $30,000. The old machine had been depreciated on a straight line basis and currently has a book value of zero. The machine would generate annual incremental revenues of $250,060 and annual incremental expenses of $50,000. it is estemated that the machine can be sold as scrap at the end of its 5 year use'ul life for $80,000. The required return on projects of this natuce is 14% and the frm's marginal tax rate is 40%. What is cash fiow trom the project fer year 1 ? $45,000$75,000$125,000 Note: The following data will be used for 5 queition: A tirm is considering investing in a new piece of equipment. The equipment would oost $500,000 and would have shipping and installation cost of $125,000. If purchased, the machine would have an estimated usetul life of 5 years and would be depreciated via a 5.year MACAS schedule (i.e., 20.0%,32.0%,19.2%,11.5%,11.5%, and 5.8% ). Adepton of the project would also require an increase in working captal of 550,000 . If the new equipment is purchased, an old piece of equipment (which is stit useablo for 5 more years) ceuld bo sold for $30,000. The old machine had boen depreciated on a straight line basis and currently has a book volve of zere. The machine would generate annual incremental revenues of $250,000 and annual incremental expenses of $50,000. It is estimated that the machine can be soid as scrap at the end of its 5 yoar useful ke for $80,000. The required return on projects of this nature is 14% and the frmis marginal tax fale is 40%. 517,300 $20,400 $32,000 843.750 Step by Step Solution
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