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You must evaluate the purchase of a proposed spectrometer for the R&D department. The purchase price of the spectrometer including modifications is $250,000, and the
You must evaluate the purchase of a proposed spectrometer for the R\&D department. The purchase price of the spectrometer including modifications is $250,000, and the equipment witl be fully depreclated at the time of purchase. The equipment would be sold after 3 years for $61,000. The equipment would require a $6,000 increase in net operating working copital (spare parts inventory). The projoct would have no effect on revenues, but it should save the firm $47,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 25%. a. What is the initial investment outlay for the spectrometer after bonus depreciation is considered, that is, what is the Year 0 project cash flow? Enter your antwer as a positive value. Round your answer to the nearest dollar. 3 b. What are the prolect's annual cash fows in Years 1,2 , and 37 Do not round intermediate calculatons, Round your answers to the nearest dollar Year its Year 2:5 Year 3:5 c. If the wACC is 13%, should the spectrometer be purchased
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