Save Chee 7 1 points eBook PC Shopping Network may upgrade its modem pool. it last upgraded 2 years ago, when it spent $140 million on equipment with an assumed life of 5 years and an assumed salvage value of $20 million for tax purposes. The firm uses straight-line depreciation. The old equipment can be sold today for $100 million. A new modem pool can be installed today for $210 million. This will have a 3 year life and will be depreciated to zero using straight-line depreciation. The new equipment will enable the firm to increase sales by $28 million per year and decrease operating costs by 514 million per year . At the end of 3 years, the new equipment will be worthless Assume the firm's tax rate is 30% and the discount rate for projects of this sort is 9%. Required: a. What is the net cash flow at time of the old equipment is replaced? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) b. What are the incremental cash flows in years (0)166021) 3? (Do not round Intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) c. What is the NPV of the replacement project? (Do not round Intermediate calculations. Enter the NPV in millions rounded to 2 decimal places.) d. What is the IRR of the replacement project? (Do not round Intermediate calculations. Enter the IRR as a percent rounded to 2 decimal places.) Print b. Not cash flow Incremental cash flow NPV milion million per year million c. d. IRR Chapter 9 Homework i 10 Quick Computing installed its previous generation of computer chip manufacturing equipment 3 years ago. Some of that older equipment will become unnecessary when the company goes into production of its new product. The obsolete equipment, which originally cost $4150 million has been depreciated straight-line over an assumed tax life of 5 years but it can be sold now for $18.30 million. The firm's tax rate is 30% What is the after tax cash flow from the sale of the equipment? (Enter your answer in millions rounded to 1 decimal place.) po Ahorax cash flow mm 5 Hum Order Potition for Alen Seinale apter 9 Homework Savo Help Save Lt Ched 11 Bottoms Up Diaper Service is considering the purchase of a new industrial Washer. It can purchase the washer for $9.000 and sellis old washer for $2,200 The new washer will last for 6 years and save $2,700 a year in expennes. The opportunity cost of capital in 19% and the firm's tax rate is 21% o. If the firm uses straight-line depreciation over a 6-year life, what are the cash flows of the project in years 0 to 67 The new water will have zero salvage value after 6 years, and the old washer is fully depreciated (Negative amounts should be indicated by a minus sign.) b. What is project NPV? (Do not found intermediate calculations, Round your answer to 2 decimal places.) c. What Is NPV ir the firm investment is entitled to immediate 100% bonus deprecation? (Do not round Intermediate calculations Round your answer to 2 decimal places.) Die a. Awal operating cash flow in your Annun operating cash flow in years 1 to 6 NPV NPV b. C. Chapter 9 Homework i 12 Canyon Tours showed the following components of working capital last year 1 points Accounts receivable Inventory Accounts payable Beginning of Year $ 27,200 13,600 16,100 End of Year $ 24,600 15,700 19,700 Ook Print n. What was the change in net working capital during the year? (A negative amount should be indicated by a minus sign) Change in not working capital b. If sales were $37,600 and costs were $25,600, what was cash flow for the year? Ignore taxes. Cash flow Chapter 9 Homework Sard Help Save & Eat Check 15 Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $60 million. The equipment will be depreciated straight-line over 6 years, but in fact, it can be sold after 6 years for $511000. The firm believes that working capital at each date must be maintained at a level of 10% of next year's forecast sales. The firm estimates production costs equal to $180 per trap and believes that the traps can be sold for $7 each Sales forecasts are given in the following table. The project will come to an end in 6 years, when the trap becomes technologically obsolete. The firm's tax bracket is 40%, and the required rate of return on the project is 8% 1 points Voce Sales (millions of traps) 2 0 0.4 0.5 0.6 0.6 0.5 0.4 Thereafter Suppose the firm can cut its requirements for working capital in half by using better inventory control systems. By how much will this Increase project NPV? (Do not round your intermediate calculations. Enter your answer in millions rounded to 4 decimal places.) Change in NPV