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Questions 26 through 36 are related The engineers at Cyberdyne Corporation have developed a new robotic manufacturing machine , the Model T1000. The marketing department's

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Questions 26 through 36 are related The engineers at Cyberdyne Corporation have developed a new robotic manufacturing machine , the Model T1000. The marketing department's forecast for sales of the new machine are shown below. The equipment needed to manufacture the machine is expected to have a useful life of 9 years. The equipment will be installed and the end of 2016 and the project will commence operations in 2017. Revenue Forecast for the Model T1000 ($ In Thousands) Year: 2017 2018 2019 2020 2021 2022 2023 2024 2025 Revenue: $1900 $2100 $2500 $2700 $2900 $3000 $2800 $2500 $2100 The following information has also been provided : 1. Management estimates the equipment and other assets needed to manufacture and distribute the T1000 will cost $2,500,000. The assets have an MACRS class life of 7 years and will have a salvage value of $300,000 at the end of the project . The equipment would be installed at the end of 2016 and production would begin in 2017. MACRS Depreciation Rates for 7 Year Class Life Year: 1 2 3 4 5 6 7 8 Revenue: 14% 25% 17% 13% 9% 9% 9% 4% 2. Based on the forecast volume of production, management forecasts the raw materials cost schedule shown below. Forecast of Cost of Raw Materials and Parts $ In Thousands Year: 2017 2018 201 2020 2021 2022 2023 2024 2025 Materials Cost: $900 $1000 $1100 $1300 $1350 $1400 $1350 $1250 $1200 3. Miscellaneous expenses and other costs are shown below: Forecast of Miscellaneous Expenses and Other Costs ($ In Thousands) Year: 2017 2018 2019 2020 2021 2022 2023 2024 2025 Other Costs $300 $350 $400 $425 $500 $550 $600 $650 $700 4. Cyberdyne's income tax rate is 35%. 5. The company generally requires net working capital to be 25% of sales. 6. Because Cyberdyne has signed long-term agreements for raw materials, the investment is considered to be less risky than the average investment. One way of taking risk into account is to have a higher or lower discount rate, or required rate of return. Consequently, Cyberdyne requires a minimum rate of return of 6.75% on this project

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