You have been asked by the president of your company to evaluate proposed project involving a...

You have been asked by the president of your company to evaluate proposed project involving a spectrometer. The equipment's base price is $140,000, and it would cost another $30,000 to modify it for special use by your firm. The spectrometer, which falls into the MACRS 3-year class, would be sold after 3 years for $60,000. The applicable depreciation rates are 33 percent, 45 percent, 15 percent, and 7 percent. Use of the equipment would require an increase in net operating working capital (spare parts inventory) of $8,000. The spectrometer would bring in $100,000 in revenue per year for each of three years with $50,000 per year in operating costs per year. The firm's marginal federal-plus-state tax rate is 25 percent. (3 year Project – Find cash flows for 3 years)

If the project’s cost of capital is 12 percent, find the all cash flows, NPV and MIRR for the project ?

Expert Solution

jeff jeffy answered 7 months ago

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck. The truck's basic price is $265,000, and it will cost another $35,000 to modify it for special use by your firm. The truck falls into the MACRS three-year class, and it will be sold after three years for $45,000. Use of the truck will require an increase in net operating working capital (spare parts inventory) of $20,000. The truck will...

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $410,000. The truck falls into the MACRS 3-year class, and it will be sold after 3 years for $66,000. Use of the truck will require an increase in NWC (spare parts inventory) of $6,600. The truck will have no effect on revenues, but it is expected to save the firm $120,000 per year in before-tax operating costs, mainly labor....

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of a new spectrometer for the firm’s R&D department. The equipment’s basic price is $70,000 and it would cost another $15,000 to modify it for special use by your firm. The spectrometer, which has a MACRS 3-year recovery period, would be sold after 3 years for $30,000. Use of the equipment would require an increase in net working capital (spare parts inventory) of $4,000. The...

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $50,000. The truck falls into the MACRS 3-year class, and it will be sold after three years for $21,000. Use of the truck will require an increase in NWC (spare parts inventory) of $3,000. The truck will have no effect on revenues, but it is expected to save the firm $16,900 per year in before-tax operating costs, mainly labor....

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $50,000. The truck falls into the MACRS 3-year class, and it will be sold after three years for $19,400. Use of the truck will require an increase in NWC (spare parts inventory) of $1,400. The truck will have no effect on revenues, but it is expected to save the firm $17,100 per year in before-tax operating costs, mainly labor....

you have been asked by the president of your company to evaluate the proposed acquisition of...

you have been asked by the president of your company to evaluate the proposed acquisition of a new special purpose truck for $70,000 , the truck fall into the MACES 3 year class and will be sold after 3 years for $19,900 use of the truck will require a increse in NWC (spare parts inventory) of $1900 , the truck will have no effect on revenues, but is expected to save the firm $23,700 per year in before tax operating...

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of a new milling machine. The machine's base price is $100,000, and it would cost another $20,000 to modify it for special use by your firm. The machine falls into the MACRS 3-year class (33.33%, 44.45%, 14.81%, and 7.41%). The machine would be sold in five years for $40,000. Use of the machine would require an increase in inventory of $5,000. The machine would have...

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, and it will be sold after three years for $20,600. Use of the truck will require an increase in NWC (spare parts inventory) of $2,600. The truck will have no effect on revenues, but it is expected to save the firm $20,200 per year in before-tax operating costs, mainly labor....

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $70,000. The truck falls into the MACRS 3-year class, is not eligible for either bonus depreciation or Section 179 expensing, and it will be sold after three years for $20,200. Use of the truck will require an increase in NWC (spare parts inventory) of $2,200. The truck will have no effect on revenues, but it is expected to save...

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $340,000. The truck falls into the MACRS 5-year class, and it will be sold after 5 years for $59,000. Use of the truck will require an increase in NWC (spare parts inventory) of $5,900. The truck will have no effect on revenues, but it is expected to save the firm $86,000 per year in before-tax operating costs, mainly labor....

Question

You have been asked by the president of your company to evaluate proposed project involving a...

Solutions

Expert Solution

Related Solutions

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of...

you have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of...

You have been asked by the president of your company to evaluate the proposed acquisition of...