You must evaluate a proposal to buy a new milling machine. The base price is $108,000, and shipping and installation costs would add another $12,500. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $65,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $5,500 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 $44,000 per year. The marginal tax rate is 40%, and the WACC is 12%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine.
What are the project's annual cash flows during years 1, 2 and 3?
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
FULL SUM IS SOLVED.
YEAR 0 = 126000 IS
OUTFLOW
You must evaluate a proposal to buy a new milling machine. The base price is $108,000,...
You must evaluate a proposal to buy a new milling machine. The base price is $108,000, and shipping and installation costs would add another $12,500. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $65,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $5,500 increase in net operating working capital increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...
you must evaluate a proposal to buy a new milling machine. the base price is 108,000, and shipping and installation costs would add another 12,500. the machine falls into the MACRS 3 year class, and it would be sold after 3 years for 65,000. The applicable depreciation rates are 33%, 45%, 15%, 7%. the machine would require a 5,500 increase in net operating working capital. there would be no effect on revenues, but pretax labor costs would decline by 44,000...
You must evaluate a proposal to buy a new milling machine. The base price is $108,000, and shipping and installation costs would add another $12,500. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $65,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a 9,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...
Question 13 3 pts You must evaluate a proposal to buy a new milling machine. The base price is $108,000, and shipping and installation costs would add another $12,500. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $65,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $5,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect...
You must evaluate a proposal to buy a new milling machine. The base price is $108,000, 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 $48,600. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $5,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...
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...
You must evaluate a proposal to buy a new milling machine. The base price is $108,000, and shipping and instaliation costs would add another $14,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for S 5400. The applicable de require a $ ® $6,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no affect on revenues, but pretax labor would decline by $37,000 per year....
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...
You must evaluate a proposal to buy a new milling machine. The base price is $128,000, 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 $70,400. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $4,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...
You must evaluate a proposal to buy a new milling machine. The base price is $107,000, 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 $37,450. The applicable depreciation rates are 33%, 45%, 15%, and 7%. 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...