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The president of your company, MorChuck Enterprises, has asked you to evaluate the proposed acquisition of a new chromatograph for the firm's Rso department. The
The president of your company, MorChuck Enterprises, has asked you to evaluate the proposed acquisition of a new chromatograph for the firm's Rso department. The equipment's basic price is $68,000, and it would cost another $20,000 to modify it for special use by your firm. The chromatograph, which fains into the MACRS 3-year class, would be sold after 3 years for $29,800. The MACRS rates for the first three yesrs are 0.3333, 0.4445 and 0.1481. Use of the equipment would require an increase in net working capital (spare parts inventory) of $2,520. The machine would have no effect on revenues; but it is erpected to save the firm $23,600 per year in before-tax operating costs, mainly labor. The firm's marginal federal-plus-state tax rate is 25%. Cosh outiows and negative NPV value, if any, should be indicated by a minus sign. Do not round intermediate calculations, Round your answers to the nearest dollar. a. What is the Year:0 net cash flow? $ b. What are the profect recurring cash flows in Years 1,2 , and 3 ? c. What is the additional (nonoperating) cash flow in Year 3
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