Superior Chips is a manufacturer of prototype chips based in Buffalo, New York (i) (Click the icon to view the prototype chips information.) (Click the icon to view information dii the options.) Present Value of $1 table Present Value of Annuity of $1 table Euture Value of Annuity of $1 table Read the tequirements Requirements 1 and 2. Calculate the after-tax cash inflows and outflows of the "modernize" and "replace" alternatives over the 2021 - 2027 period and calculate the net present value for each altemative Let's begin with the "modernize" atternative Start by computing the present value of the after-tax cash flows from operations, then calculate the present value of the after-tax cash savings from depreciation and the terminal disposal value, and finally, determine the total net present value (NPV) of the investment for the "modernize" alternative (Round intermediary calculations and your final answers to the nearest whole dollar Use a munus sign or parentheses for a negative present value of net cash tlows.) Requirements 1. Calculate the after-tax cash inflows and outflows of the "modernize" and "replace" alternatives over the 2021 - 2027 period 2. Calculate the net present value of the "modemize" and "replace" alternatives 3. Suppose Superior Chips is planning to build several more plants. It wants to have the most advantageous tax position possible. Superior Chips has been approached by Spain, Malaysia, and Australia to construct plants in their countries. Briefly describe in qualitative terms the income tax features that would be advantageous to Superior Chips More info Next year, in 2021, Superior Chips expects to deliver 555 prototype chips at an average price of $75,000. Superior Chips' marketing vice president forecasts growth of 50 prototype chips per year through 2027 . That is, demand will be 555 in 2021, 605 in 2022, 655 in 2023, and so on. The plant cannot produce more than 530 prototype chips annually. To meet future demand, Superior Chips must either modernize the plant or replace it. The old equipment is fully depreciated and can be sold for $3,800,000 if the plant is replaced. If the plant is modernized, the costs to modernize it are to be capitalized and depreciated over the useful life of the modernized plant. The old equipment is retained as part of the "modernize" alternative. Data table tion 3 The following data on the two ootions are available stion 4 Superior Chips uses straight-ine depreciation, assuming zero terminal disposal value for simplicity, we assume no change in prices or costs in future years. The investment will be made at the beginning of 2021, and all transactions thereafter occur on the last day of the year Superior Chips' required rate of return is 16%. There is no difference between the "modernize" and "replace" alternatives in terms of required working capital Superior Chips pays a 30% tax rate on all income. Proceeds from sales of equipment above book value are taxed at the same 30% rate Superior Chips is a manufacturer of prototype chips based in Buffalo, New York (i) (Click the icon to view the prototype chips information.) (Click the icon to view information dii the options.) Present Value of $1 table Present Value of Annuity of $1 table Euture Value of Annuity of $1 table Read the tequirements Requirements 1 and 2. Calculate the after-tax cash inflows and outflows of the "modernize" and "replace" alternatives over the 2021 - 2027 period and calculate the net present value for each altemative Let's begin with the "modernize" atternative Start by computing the present value of the after-tax cash flows from operations, then calculate the present value of the after-tax cash savings from depreciation and the terminal disposal value, and finally, determine the total net present value (NPV) of the investment for the "modernize" alternative (Round intermediary calculations and your final answers to the nearest whole dollar Use a munus sign or parentheses for a negative present value of net cash tlows.) Requirements 1. Calculate the after-tax cash inflows and outflows of the "modernize" and "replace" alternatives over the 2021 - 2027 period 2. Calculate the net present value of the "modemize" and "replace" alternatives 3. Suppose Superior Chips is planning to build several more plants. It wants to have the most advantageous tax position possible. Superior Chips has been approached by Spain, Malaysia, and Australia to construct plants in their countries. Briefly describe in qualitative terms the income tax features that would be advantageous to Superior Chips More info Next year, in 2021, Superior Chips expects to deliver 555 prototype chips at an average price of $75,000. Superior Chips' marketing vice president forecasts growth of 50 prototype chips per year through 2027 . That is, demand will be 555 in 2021, 605 in 2022, 655 in 2023, and so on. The plant cannot produce more than 530 prototype chips annually. To meet future demand, Superior Chips must either modernize the plant or replace it. The old equipment is fully depreciated and can be sold for $3,800,000 if the plant is replaced. If the plant is modernized, the costs to modernize it are to be capitalized and depreciated over the useful life of the modernized plant. The old equipment is retained as part of the "modernize" alternative. Data table tion 3 The following data on the two ootions are available stion 4 Superior Chips uses straight-ine depreciation, assuming zero terminal disposal value for simplicity, we assume no change in prices or costs in future years. The investment will be made at the beginning of 2021, and all transactions thereafter occur on the last day of the year Superior Chips' required rate of return is 16%. There is no difference between the "modernize" and "replace" alternatives in terms of required working capital Superior Chips pays a 30% tax rate on all income. Proceeds from sales of equipment above book value are taxed at the same 30% rate
