1.
Option IV
2.
=113000+13000+7500=133500
3.
=(60000-(113000+13000)*33%)*(1-35%)+(113000+13000)*33%=53553
4.
=(60000-(113000+13000)*45%)*(1-35%)+(113000+13000)*45%=58845
5.
Case 1: Annual cash flows does not include other cash flows
=(60000-(113000+13000)*15%)*(1-35%)+(113000+13000)*15%=45615
Case 2: Annual cash flows includes other cash flows
=(60000-(113000+13000)*15%)*(1-35%)+(113000+13000)*15%+7500+62150-(62150-(113000+13000)*7%)*35%=96599.50
6.
NPV=-(113000+13000+7500)+((60000-(113000+13000)*33%)*(1-35%)+(113000+13000)*33%)/1.08+((60000-(113000+13000)*45%)*(1-35%)+(113000+13000)*45%)/1.08^2+((60000-(113000+13000)*15%)*(1-35%)+(113000+13000)*15%+7500+62150-(62150-(113000+13000)*7%)*35%)/1.08^3=43220.0115581974
As NPV is positive, purchase the machine
Ch 12: End of Chapter Problems - Cash Flow Estimation and Risk Analysis BOOK You must...
please complete this correclty 112: End-of-Chapter Problems - Cash Flow Estimation and Risk Analysis Click here to read the eBook: Analysis of an Expansion Project Q Search this cours NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base price is $197,000, and shipping and installation costs would add another $7,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $88,650. The applicable depreciation rates are...
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...
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...
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...
NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base price is $193,000, and shipping and installation costs would add another $10,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $125,450. The applicable depreciation rates are 33%, 45%, 15%, and 7%. 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...
NEW PRUJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base price is $122,000, and shipping and installation costs would add another $6,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $85,400. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $7,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on...
NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base price is $164,000, and shipping and installation costs would add another $11,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $73,800. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $8,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on...
NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base price is $173,000, and shipping and installation costs would add another $7,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $103,800. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $9,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on...
NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base price is $154,000, 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 $92,400. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $5,000 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 base price is $199,000, and shipping and installation costs would add another $15,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $129,350. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $10,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...