{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-06-10T04:24:12-04:00", "answer_date": "2024-06-10 04:24:12", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "2565200", "url": "\/study-help\/questions\/suppose-a-firm-is-considering-a-laborsaving-investment-in-year-2565200", "question_creation_date_js": "2024-06-10T04:24:12-04:00", "question_creation_date": "Jun 10, 2024 04:24 AM", "meta_title": "[Solved] Suppose a firm is considering a labor-sav | SolutionInn", "meta_description": "Answer of - Suppose a firm is considering a labor-saving investment. In year 0, the project requires an $11,700 investment in equi | SolutionInn", "meta_keywords": "firm,labor-saving,investment,year,project,requires,$11,700,equipment,figures,thousands,dollars,depreciated", "question_title_h1": "Suppose a firm is considering a labor-saving investment. In year 0, the project requires an $11,700 investment in equipment (all figures are in thousands of", "question_title": "Suppose a firm is considering a labor-saving investment. In year 0, the", "question_title_for_js_snippet": "Suppose a firm is considering a labor saving investment In year 0, the project requires an $11,700 investment in equipment (all figures are in thousands of dollars) This investment is depreciated using the straight line method over five years and there is salvage value in year 5 of $4,500 With or without the cost reducing investment, all cash flows start in year 1 and end in year 5 The inflation rate is 2 6 in year 1 and declines to 1 4 in year 5 the real growth rate is 21 3 in year 2 and declines to 9 5 in year 5 (assume both fall in a straight line fashion) The tax rate is 41 0 in all years The cost of capital is 15 Without the cost reducing investment, the firm's existing investments will generate year 1 revenue, labor costs, other cash expenses, and depreciation of $15,200, $4,100, $5,300, and $3,300, respectively With the cost reducing investment, the firm's year 1 labor costs will be $1,600 and revenues and other cash expenses will remain the same What is the cost reducing project NPV and IRR Should the firm undertake the project Please, it needs to be an excel Thank you in advance for the support and assistance", "question_description": "

Suppose a firm is considering a labor-saving investment. In year 0, the project requires an $11,700 investment in equipment (all figures are in thousands of dollars). This investment is depreciated using the straight-line method over five years and there is salvage value in year 5 of $4,500. With or without the cost-reducing investment, all cash flows start in year 1 and end in year 5. The inflation rate is 2.6% in year 1 and declines to 1.4% in year 5; the real growth rate is 21.3% in year 2 and declines to 9.5% in year 5 (assume both fall in a straight-line fashion). The tax rate is 41.0% in all years. The cost of capital is 15%. Without the cost-reducing investment, the firm's existing investments will generate year 1 revenue, labor costs, other cash expenses, and depreciation of $15,200, $4,100, $5,300, and $3,300, respectively. With the cost-reducing investment, the firm's year 1 labor costs will be $1,600 and revenues and other cash expenses will remain the same. What is the cost-reducing project NPV and IRR? Should the firm undertake the project? Please, it needs to be an excel. Thank you in advance for the support and assistance<\/p>", "transcribed_text": "", "related_book": { "title": "The Changing Geography Of Banking And Finance", "isbn": "1441947205, 978-1441947208", "edition": "1st Edition", "authors": "Pietro Alessandrini ,Michele Fratianni ,Alberto Zazzaro", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/2024\/03\/66050c9f889e3_94366050c9f62f22.jpg", "uri": "\/textbooks\/the-changing-geography-of-banking-and-finance-1st-edition-978-1441947208-260622", "see_more_uri": "" }, "free_related_book": { "isbn": "1619546493", "uri": "\/textbooks\/aviation-maintenance-technician-powerplant-4th-edition-978-1619546493-154340", "name": "Aviation Maintenance Technician Powerplant", "edition": "4th Edition" }, "question_posted": "2024-06-10 04:24:12", "see_more_questions_link": "\/study-help\/questions\/business-banking-2021-September-12", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/making-use-of-poiseuilles-equation-1.7d-find-the-mass", "description": "Making use of Poiseuille's equation (1.7d), find the mass of gas flowing per unit time through the pipe of length I and radius a if constant pressures Pl and p2 are maintained at its ends.", "stars": 3 }, { "url": "\/study-help\/entrepreneurship-starting-operating\/tracy-gibbons-owns-a-sports-apparel-company-in-columbia-sc", "description": "Tracy Gibbons owns a sports apparel company in Columbia, SC. 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