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What is the answer to b.6, c., and d-1? Please fill in the blanks. Everything else is already correct. Thanks! DataPoint Engineering is considering the
What is the answer to b.6, c., and d-1? Please fill in the blanks. Everything else is already correct. Thanks!
DataPoint Engineering is considering the purchase of a new piece of equipment for $210,000. It has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $110,000 in nondepreciable working capital. $27,000 of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table. Use Table 1211, Table 1212. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year 1 2 Amount $176,000 154,000 124,000 109,000 92,000 82,000 The tax rate is 25 percent. The cost of capital must be computed based on the following: Cost (aftertax) 6.40% 10.40 13.00 Weights 40% Debt Preferred stock Common equity (retained earnings) 50 a. Determine the annual depreciation schedule. (Do not round intermediate calculations. Round your depreciation base and annual depreciation answers to the nearest whole dollar. Round your percentage depreciation answers to 3 decimal places.) Year er Depreciation " Percentage Base Depreciation $ 210,000 0.200 210,000 0.320 210,000 0.192 210,000 0.115 210,000 0.115 210,000/ 0.058 Annual Depreciation $ 42,000 67,200 40,320 24,150 24,150 12,180 210,000 b. Determine the annual cash flow for each year. Be sure to include the recovered working capital in Year 6. (Do not round intermediate calculations and round your answers to 2 decimal places.) Year Cash Flow $ 142,500 132,300 103,080 87,788 75,038 c. Determine the weighted average cost of capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Weighted average cost of capital T % d-1. Determine the net present value. (Use the WACC from part c rounded to 2 decimal places as a percent as the cost of capita (e.g., 12.34%). Do not round any other intermediate calculations. Round your answer to 2 decimal places.) Net present valueStep by Step Solution
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