Tannen Industries is considering an expansion. The necessary equipment would be purchased for $9 million and will be fully depreciated at the time of purchase, and the expansion would require an additional $2 million investment in net operating working capital. The tax rate is 25%.
A. The initial outlay of the project will be = $9 million + $2 million + 25% tax rate = $13,750,000. In this case, additional investment in operating working capital will also be considered.
C. The company made an expenses of $10,000 this need to be included as incremental cash flow as this is also included in the research.
E. Sale of building for $5 million can be treated as opportunity cost therefore, in this case option I is correct.
Tannen Industries is considering an expansion. The necessary equipment would be purchased for $9 million and...
Tannen Industries is considering an expansion. The necessary equipment would be purchased for $9 million and will be fully depreciated at the time of purchase, and the expansion would require an additional $4 million investment in net operating working capital. The tax rate is 25%. a. What is the initial investment outlay after bonus depreciation is considered? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar. Enter your...
Tannen Industries is considering an expansion. The necessary equipment would be purchased for $16 million and will be fully depreciated at the time of purchase, and the expansion would require an additional $3 million investment in net operating working capital. The tax rate is 25%. What is the initial investment outlay after bonus depreciation is considered? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar. Enter your answer...
1. Problem 12.01 (Required Investment) eBook Tannen Industries is considering an expansion. The necessary equipment would be purchased for $16 million and will be fully depreciated at the time of purchase, and the expansion would require an additional $1 million investment in net operating working capital. The tax rate is 25%. a. What is the initial investment outlay after bonus depreciation is considered? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer...
Click here to read the book: Analysis of an Expansion Project NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new ing machine. The base price is $170,000, and shipping and installation costs would add another $20,000. The machines into the MACRS 3-year class, and it would be sold after 3 years for $76,500. The applicable depreciation rates are 334,45, 15and 74. The machine would require a $5,000 increase in net operating working capital increased Inventory less increased...
Click here to read the eBook: Analysis of an Expansion Project NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new miling machine. The base price is $153,000, and shipping and installation costs would add another $20,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $68,850. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $6,500 increase in net operating working capital (increased...
Truman Industries is considering an expansion. The necessary equipment would be purchased for $9 million, and the expansion would require an additional $3 million investment in net operating working capital. The tax rate is 40%. What is the initial investment outlay: The company spent and expensed R50 000 on research related to the project last year. Would this change your answer? The company plans to use a building that it owns to house the project. The building could be sold...
NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base price is $195,000, and shipping and installation costs would add another $17,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $87,750. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $8,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on...
You must evaluate a proposal to buy a new milling machine. The purchase price of the milling machine, including shipping and installation costs, is $198,000, and the equipment will be fully depreciated at the time of purchase. The machine would be sold after 3 years for $127,000. The machine would require a $3,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $54,000...
You must evaluate a proposal to buy a new milling machine. The purchase price of the milling machine, including shipping and installation costs, is $191,000, and the equipment will be fully depreciated at the time of purchase. The machine would be sold after 3 years for $111,000. The machine would require a $3,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $58,000...
You must evaluate a proposal to buy a new milling machine. The purchase price of the milling machine, including shipping and installation costs, is $122,000, and the equipment will be fully depreciated at the time of purchase. The machine would be sold after 3 years for $47,000. The machine would require a $7,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $30,000...