SUUTE 6 ints eBook Print eferences Check my work Philadelphia Fastener Corporation manufactures nails, screws, bolts, and other fasteners. Management is considering a proposal to acquire new material handling equipment. The new equipment has the same capacity as the current equipment but will provide operating efficiencies in labor and power usage. The savings in operating costs are estimated at $150,000 annually, The new equipment will cost $300,000 and will be purchased at the beginning of the year when the project is started. The equipment dealer is certain that the equipment will be operational during the second quarter of the year it is installed. Therefore, 60 percent of the estimated annual savings can be obtained in the first year. The company will incur a one-time expense of $30,000 to transfer production activities from the old equipment to the new equipment. No loss of sales will occur, however, because the processing facility is large enough to install the new equipment without interfering with the operations of the current equipment. The equipment is in the MACRS 7-year property class. The firm would depreciate the machinery in accordance with the MACRS depreciation schedule. The current equipment has been fully depreciated. Management has reviewed its condition and has concluded that it can be used an additional eight years. The company would receive $10,000, net of removal costs, if it elected to buy the new equipment and dispose of its current equipment at this time. The new equipment will have no salvage value at the end of its life. The company is subject to a 30 percent income tax rate and requires an after-tax return of at least 12 percent on any investment Use Arpendix A and Exhibit 16-9 for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the annual incremental after-tax cash flows for Philadelphia Fastener Corporation's proposal to acquire the new equipment. 2-a. Calculate the net present value of the proposal to acquire the new equipment using the cash flows calculated in requirement 1. Assume all cash flows take place at the end of the year. 2-b. Should management purchase the new equipment? BRE u Required: 1. Calculate the annual Incremental after tax cash flows for Philadelphia Fastener Corporation's proposal to acquire the new equipment 2-a. Calculate the net present value of the proposal to acquire the new equipment using the cash flows calculated in requirement 1. Assume all cash flows take place at the end of the year, 2-b. Should management purchase the new equipment? eBook Complete this question by entering your answers in the tabs below. Print eferences Req1 Reg 2A Reg 2B Calculate the annual incremental after-tax cash flows for Philadelphia Fastener Corporation's proposal to acquire the newe dollar) Annual Operation Year 1 Year 2 Year 3 Year 4 Year 5 Year Cash operating savings $ 90,000 $ 150,000 $ 150.000 $ 150,000 $ 150,000 $ 150.00 Less tax effect 36,000 60,000 60,000 60,000 60,000 60,00 Cash savings after tax $ 54,000 $ 90,000 $ 90,000 $ 90,000 $ 90.000 $ 90,0 Depreciation tax shield 18,863 32,327 After-tax operating cash flows $ 72.863 $ 122,327 $ 90,000 $ 90,000 $ 90,000 $ 90.0 BB IUT CON LOS HOWS Tor Philadelphia Fastener Corporation's proposal to acquire the new equipment. (Round your final a $ Annual Operation Year 3 Year 4 150,000 $ 150,000 60,000 60,000 90,000 $ 90,000 Year 1 Year 2 90,000 $ 150,000 36,000 60,000 54,000 $ 90,000 18,863 X 32,327 72,863 S 122,327 $ Year 5 $ 150,000 60,000 $ 90,000 Year 6 $ 150,000 60,000 $ 90,000 Year 7 150.000 60,000 90,000 Year 8 150,000 60,000 90.000 s $ $ $ $ $ 90,000 $ 90,000 $ 90,000 $ 90,000 $ 90.000 $ 90.000 Answer is not complete. Complete this question by entering your answers in the tabs below. Req1 Req 2A Reg 2B Calculate the net present value of the proposal to acquire the new equipment using the cash flows calculated in requireme 1. Assume all cash flows take place at the end of the year . (Round your final answer to a whole dollar amount.) Net present value