Fin 515 Week 5 Project

%Week 5 regurgitate FIN515 11-7) New-Project Analysis You obtain been asked by the chairperson of your company to evaluate the proposed encyclopedism of a new plentitude mass mass spectrometer for the rigids R&D department. The equipments basic value is $70,000, and it would embody another $15,000 to transmute it for excess use by your firm. The spectrometer, which falls into the MACRS 3- course of instruction class, would be interchange aft(prenominal) 3 years for $30,000. enjoyment of the equipment would require an increase in moolah working jacket crown (sp ar parts inventory) of $4,000. The spectrometer would have no force on revenues, but it is expect to publish the firm $25,000 per year in before- impose operating make ups, in general labor. The firms b order of magnitudeline federal-plus-state tax rate is 40%. a. What is the net cost of the spectrometer? (That is, what is the course of instruction-0 net speedy payment be given?) b. What are the net operating property periods in years 1, 2, and 3? c. What is the additional (nonoperating) silver in flow in twelvemonth 3? d. If the projects cost of capital is 10%, should the spectrometer be purchased?

Answers- A) Net spot after class 0 Equipment| ($70,000)| Modifications| ($15,000)| surplus Net bully call for| ($4,000)| Total Net be ( form-0)| ($89,000)| B) Operating Cash flow for Year 1-3 | Year 1| Year 2| Year 3| After tax-cost savings| $15,000 | $15,000 | $15,000 | Depreciation| $28,050 | $38,250 | $12,750 | Depreciation tax savings| $11,220.0 | $15,300.0 | $5,100.0 | | | | | Operating cash flow| $26,220 | $30,300.0 | $20,100.0 | C) Additional (nonoperating) cash flow in Year 3 Salvage Value| $30,000 | evaluate on Salvage order | $9,620 | Net Working Capital recovery| $4,000 | | | Cash tally for| $24,380 | D) If the projects cost of capital is 10%, should the spectrometer be purchased? | Year 0| Year 1 | Year 2| Year 3| Cash Flow| -89,000| 26,220| 30,300| 44,480| hail of Capital| 10%| | | | | | | | | NPV| ($6,703.83)| | | |...If you compliments to get a superabundant essay, order it on our website: Ordercustompaper.com

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