DataPoint Engineering is considering the purchase of a new piece of equipment for $310,000. It has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $130,000 in nondepreciable working capital. Fifty-two thousand dollars of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table. Use Table 12–11, Table 12–12. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.
Year | Amount | ||||
1 | $ | 206,000 | |||
2 | 174,000 | ||||
3 | 144,000 | ||||
4 | 129,000 | ||||
5 | 102,000 | ||||
6 | 92,000 | ||||
a) | Year 1 | $ 62,000 |
Year 2 | $ 99,200 | |
Year 3 | $ 59,520 | |
Year 4 | $ 35,650 | |
Year 5 | $ 35,650 | |
Year 6 | $ 17,980 | |
b) | Year 1 | $ 162,800 |
Year 2 | $ 151,560 | |
Year 3 | $ 118,656 | |
Year 4 | $ 100,995 | |
Year 5 | $ 82,095 | |
Year 6 | $ 121,794 | |
c) | 13.50% | |
d-1) | $63,652.37 | |
d-2) | Yes |
DataPoint Engineering is considering the purchase of a new piece of equipment for $310,000. It has...
DataPoint Engineering is considering the purchase of a new piece of equipment for $310,000. It has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $130,000 in nondepreciable working capital. Fifty-two thousand dollars of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table. Use Table 12–11, Table 12–12....
DataPoint Engineering is considering the purchase of a new piece of equipment for $370,000. It has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $190,000 in nondepreciable working capital. $67,000 of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table. Use Table 12–11, Table 12–12. Use Appendix...
DataPoint Engineering is considering the purchase of a new piece of equipment for $330,000. It has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $150,000 in nondepreciable working capital. $57,500 of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table. Use Table 12–11, Table 12–12. Use Appendix...
DataPoint Engineering is considering the purchase of a new piece of equipment for $350,000. It has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $170,000 in nondepreciable working capital. $62,000 of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table. Use Table 12–11, Table 12-12. Use Appendix...
DataPoint Engineering is considering the purchase of a new piece of equipment for $360,000. It has an eight year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $180,000 in nondepreciable working capital. Sixty-five thousand dollars of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table. Use Table 12-11. Table...
DataPoint Engineering is considering the purchase of a new piece of equipment for $255,000. It has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $250,000 in nondepreciable working capital. Eighty-two thousand dollars of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table. Use Table 12-11 Table 12-12....
Please evaluate below questions. d-1. Determine the net present value. (Use the WACC from part c rounded to 2 decimal places as a percent as the cost of capital (e.g., 12.34%). Do not round any other intermediate calculations. Round your answer to 2 decimal places.) 1/(1+0.1306)^1 = 0.88448611356 1/(1+0.1306)^2 = 0.78231568509 1/(1+0.1306)^3 = 0.69194735989 1/(1+0.1306)^4 = 0.61201783114 1/(1+0.1306)^5 = 0.5413212729 1/(1+0.1306)^6 = 0.47879114886 170000 * 0.88448611356 = 150362.64 155300 * 0.78231568509 = 121493.63 122880 * 0.69194735989 = 85026.49 105662.5 *...
Universal Electronics is considering the purchase of manufacturing equipment with a 10-year midpoint in its asset depreciation range (ADR). Carefully refer to Table 12-11 to determine in what depreciation category the asset falls. (Hint: It is not 10 years.) The asset will cost $210,000, and it will produce earnings before depreciation and taxes of $68,000 per year for three years, and then $31,000 a year for seven more years. The firm has a tax rate of 35 percent. Assume the...
Universal Electronics is considering the purchase of manufacturing equipment with a 10-year midpoint in its asset depreciation range (ADR). Carefully refer to the 12-11 to determine in what depreciation category the asset fails. (Hint: It is not 10 years.) The asset will cost $110.000, and it will produce amings before depreciation and taxes of $34.000 per year for three years, and then $15,000 a year for seven more years. The firm has a tax rate of 35 percent. Assume the...
Universal Electronics is considering the purchase of manufacturing equipment with a 10-year midpoint in its assot depreciation Fange (ADR) Carefully refer to Table 12-11 to determine is a depreciation category the asset alls. (Hint: It is not 10 years) The asset will cost $275.000, and it will produce canings before depreciation and traces of 590.000 per year for three years, and then 544,000 a year for seven more years The firm has a tax rate of 35 percent. Assume the...