This is all one question, thank you very much in advance! You must evaluate a proposal...

This is all one question, thank you very much in advance!

You must evaluate a proposal to buy a new milling machine. The base price is $189,000, and shipping and installation costs would add another $16,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $103,950. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $7,000 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 $45,000 per year. The marginal tax rate is 35%, and the WACC is 13%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine.

How should the $5,000 spent last year be handled?
1. Last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the project's life. Hence, it should not be included in the initial investment outlay.
2. Last year's expenditure is considered as an opportunity cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.
3. Last year's expenditure is considered as a sunk cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.
4. The cost of research is an incremental cash flow and should be included in the analysis.
5. Only the tax effect of the research expenses should be included in the analysis.
-Select-IIIIIIIVVItem 1
What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? Round your answer to the nearest cent.
$
What are the project's annual cash flows during Years 1, 2, and 3? Round your answer to the nearest cent. Do not round your intermediate calculations.

Year 1 $

Year 2 $

Year 3 $
Should the machine be purchased?

Expert Solution

jeff jeffy answered 1 month ago

This is all one question, thank you so much in advance! You must evaluate a proposal...

This is all one question, thank you so much in advance! You must evaluate a proposal to buy a new milling machine. The base price is $102,000, and shipping and installation costs would add another $10,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $61,200. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $7,500 increase in net operating working capital (increased inventory less increased...

This is all one question, thank you so much in advance! You must evaluate the purchase...

This is all one question, thank you so much in advance! You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $200,000, and it would cost another $30,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $100,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require a $13,000 increase in...

This is all one question, thank you so much in advance. The Bigbee Bottling Company is...

This is all one question, thank you so much in advance. The Bigbee Bottling Company is contemplating the replacement of one of its bottling machines with a newer and more efficient one. The old machine has a book value of $575,000 and a remaining useful life of 5 years. The firm does not expect to realize any return from scrapping the old machine in 5 years, but it can sell it now to another firm in the industry for $265,000....

Question 2 (20 marks) You must evaluate a proposal to buy a new milling machine with...

Question 2 You must evaluate a proposal to buy a new milling machine with purchase price of $150,000. The machine will be depreciated to zero value over the 4 years using prime cost (straight line) method. The machine would be sold after 4 years for $70,000. Inventory will increase by $17,000 and account payables will rise by $7,500. All other working capital components will stay the same, so the change in net working capital is $9,500. The managers expect to...

Please type the answer for i can copy it. Thank you very much. -Question 1 Respond...

Please type the answer for i can copy it. Thank you very much. -Question 1 Respond to the following in a minimum of 175 words: Read the following pseudocode class definitions: Class Plant Public Module message() Display "I'm a plant." End Module End Class Class Tree Extends Plant Public Module message() Display "I'm a tree." End Module End Class -Question 2 Given these class definitions, determine what the following pseudocode will display: Declare Plant p Set p = New Tree()...

PLEASE ANSWER ALL 4 THANK YOU VERY MUCH!!!! 1. How was the Periodic Table originally organized?...

PLEASE ANSWER ALL 4 THANK YOU VERY MUCH!!!! 1. How was the Periodic Table originally organized? Explain the current organization of the Periodic Table and why it is a more accurate layout of the elements. 2. What is the difference between groups and periods? What are the common names for groups IA, IIA, VIIA, VIIIA? 3. Why were elements in group 18, VIIIA, formerly known as inert gases? How is the current name of “noble gases” more appropriate? Provide examples...

Please answer a statistic problem(please answer all subquestions). Thank you very much. NCbirths, cont' d. This...

Please answer a statistic problem(please answer all subquestions). Thank you very much. NCbirths, cont' d. This time we will use a subset of the dataset after removing premature birth (36 weeks or sooner) and continue to use MomRace as the explanatory variable to predict birth weight. To get NCbirths: install.packages("Stat2Data") library(Stat2Data) data("NCbirths") (a) Use the following R command to remove premature birth and create a dataset noPremie. noPremies<-subset(NCbirths, NCbirths$Premie==0) ##subset(dataName, condition) (b) Construct a side-by-side boxplot of birth weights separated...

Hey! I'm having trouble answering this for my assignment. Thank you so much in advance. 1)...

Hey! I'm having trouble answering this for my assignment. Thank you so much in advance. 1) Which type of vessels, arteries or veins, has more muscle fibers? What is the functional significance of this? 2a) In general, we have no conscious control over smooth muscle or cardiac muscle function, whereas we can consciously control to some extent all skeletal muscles. Can you consciously control your breathing? What does this tell you about the muscle type of the diaphragm? 2b) What...

HI please answer all parts of my question. Thank you so much! I will rate you!...

HI please answer all parts of my question. Thank you so much! I will rate you! Why do we call cardiac muscle to be a syncytium of many individual muscle cells? What is the name of membranes that connect longitudinally adjacent muscle cells? As you know the mechanism of organophosphates involves irreversible inhibitors of AChE. Organophosphates have been used in several murders (VX used to kill the half-brother of North Korean dictator Kim Jong Un; Sarin gas used to kill...

Please answer all questions, thank you in advance! A) What is the lowest possible energy (in...

Please answer all questions, thank you in advance! A) What is the lowest possible energy (in electron volts) of an electron in hydrogen if its orbital angular momentum is ?2 h-bar? Express your answer in electronvolts to three significant figures. B) What is the largest value of the z component of the orbital angular momentum (in terms of h-bar) for the electron in part A? Express your answer as an integer to one significant figure. C) What is the smallest...

Question