Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You must evaluate the purchase of a proposed spectrometer for the R8D department. The purchase price of the spectrometer including modifications is $210,000, and the
You must evaluate the purchase of a proposed spectrometer for the R8D department. The purchase price of the spectrometer including modifications is $210,000, and the equipme be fuly depreclated at the time of purchase. The equipment would be sold after 3 years for $70,000, The equipment would require a $7,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $37,000 per year in before-tax labor costs. The firm's marginal federalplus-stake tax rate is 25%. a. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash fow? Enter your answer as a positive value. Round your answer to the nearnet Anlilar 5 b. What are the prolect's annual cash flons in Years 1,2 , and 37 Do not round intermediate calculations. Round your answers to the nearest doliar. Year 1:5 Yearis 2 Year 3: 5 c. It the wnc is 12%, should the spectrometer be purchased
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started