Question

You must be a proposal to buy a new wing machine. The base 117,000, and now the machine is the RS 3-yeam, we areas for 152,450. The are 334,45%, 15% and 7. The macie widmoure a Sf.500 open wingers and there were the one who can wat die 100 per per te mergear to rate is 191, and the WACCINA, tempe 4500 yeye on me a. How should the 4.500 en year beaded L The cost of research is an incremental show and should be included in the way 11. Only the effect of the research expenses would be induced in the m. Last year's wedture should be treated show and where to the desert TV. Last year's expenditures dered to and do not own the bed the last year's expenditure is considered a un cost and do not an incrementar a fowe hiret e due in the . What is the initial investment outlay for the machine for capital budgeting, that is what is the new chow me your one stund wer is the rearest What are the project's annual cafows during years 1, 2, and Detroud intermediate and you nowers to the rest cont. Year 11 c. Should the machine be purchased!

Answer 1

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C w ENG 04:04 31-07-2020 99+ 30 Х UW258 fx UW UX UY UZ VA VB VC VD VE VE 257 258 259 260 261 262 263 MILLING 0 1 2 3 -125000 YEAR COST OF ASSET [117000 + 8000] WORKING CAPITAL SAVINGS IN LABOR COSTS -8500 59000.00 59000.00 59000.00 264 265 266 267 LESS COSTS LESS 56250.00 18750.00 = DEPRECIATION INCOME BEFORE TAX TAX 35% NET INCOME LESS 41250.00 17750.00 6212.50 11537.50 41250.00 52787.50 2750.00 962.50 1787.50 56250.00 = -133500 268 269 270 271 272 273 274 275 276 277 278 40250.00 14087.50 26162.50 18750.00 44912.50 8500.00 37285.00 (SEE NOTE) 90697.50 58037.50 ADD DEPRECIATION OPERATING CASH FLOW ADD RECOVERY OF WORKING CAPITAL ADD AFTER TAX SALVAGE VALUE OF ASSET NET CASH FLOW 1/(1+r)^n = PV FACTOR AT 12% PV OF CFAT (A-B) -133500 52787.50 58037.50 1 0.7118 0.8929 47131.70 0.7972 46267.14 -133500 64556.69 24455.53 NPV 279 NPV 24455.53 280 EAC MACRS RELEVANT Ml-np-ir BETA LEVERED NPV CCA REPLACEMENT BOND OPTION TO WAIT STEIN indiffEPS EBIT OCF 1 LEA ... +

C w ENG 04:06 31-07-2020 99+ 30 Х VP274 ... fc VE VG VH VI VJ VK VL VM VN VO VP 256 257 258 259 260 261 NOTE 262 125000 COST OF ASSET DEPRECIATION YEAR 263 264 265 266 267 1 RATE 33.00% 45.00% 15.00% DEPRECIATION BOOK VALUE 41250 83750 56250 27500 2 3 8750 18750 8750 4 7.00% 0 268 269 270 271 272 273 NOTE SALVAGE VALUE BOOK VALUE 52650.00 A 8750.00 43900.00 PROFIT ON SALE 274 (A-B) TAX ON PROFIT AFTER TAX SALVAGE VALUE 15365.00 B 37285.00 A-B 275 276 277 278 279 EAC MACRS RELEVANT MI-np-ir BETA LEVERED NPV CCA REPLACEMENT BOND OPTION TO WAIT STEIN indiffEPS EBIT OCF 1 LEA ... +

04:05 C w ? ENG 99+ 31-07-2020 30 Х UY298 fx UW UX UY UZ VA VB VC VD VE VE 280 a V LAST YEAR'S EXPENDITURE OF 4500 IS CONSIDERED AS A SUNK COST AND DOES NOT REPRESENT AN INCREMENTAL CASH FLOW HENCE, IT SHOULD NOT BE INCLUDED IN THE ANALYSIS 281 282 283 284 285 286 287 288 289 290 291 b YEAR O CASH FLOW 133500.00 с YEAR 1 CASH FLOW 52787.50 YEAR 2 CASH FLOW 58037.50 YEAR 3 CASH FLOW 90697.50 [ INCLUDING WORKING CAPITAL RECOVERY AND AFTER TAX SALVAGE ] NPV 24455.53 YES, as NPV is POSITIVE, machine should be purchased 292 d 293 294 295 296 297 298 299 300 301 302 303 EAC MACRS RELEVANT MI-np-ir BETA LEVERED NPV CCA REPLACEMENT BOND OPTION TO WAIT STEIN indiffEPS EBIT OCF 1 LEA ... +