Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firm's R&D department.

image text in transcribed
The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firm's R&D department. The equipment's basic price is $150,000, and it would cost another $22,500 to modify it for special use by your firm. The chromatograph, which falls into the MACRS 3-year dass, would be sold after 3 years for $37,500. The MACRS rates for the first 3 years are 0.3333, O.4445 and 0.1481. use of the equinet would require an increase in net working capital (spare parts inventory) of $7,500. The machine would have no effect on revenues, but it is expected to save the firm $45,000 per year in before-tax operating costs, mainly labor. The firm's marginal federal-plus-state tax rate is 30%. a. What is the Year O net cash flow? If the answer is negative, use parentheses. b. What are the net operating cash flows in Years 1, 2, and 37 Do not round intermediate calculations. Round your answers to the nearest dollar Year 1 Year 2 Year 3 C What is the adstional (nonoperating) cash flow in Year 37 Do not round intermediate calkculations, Round your answer to the

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Handbook Of The Fundamentals Of Financial Decision Making

Authors: Leonard C MacLean, William T Ziemba

1st Edition

9814417343, 978-9814417341

More Books

Students also viewed these Finance questions

Question

2. Identify conflict triggers in yourself and others

Answered: 1 week ago