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 8 months ago

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

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