Lily Inc., is contemplating the purchase of a new $396,513 glass manufacturing system. Delivery costs for...

Lily Inc., is contemplating the purchase of a new $396,513 glass manufacturing system. Delivery costs for the system will amount to $33,218 and the firm will need to pay an additional $27,662 in modification costs. The firm spent the last six months traveling to several manufacturing plants to analyze various pieces of equipment, which cost the firm $23,676. The system will be depreciated straight-line to zero over its five-year life. The firm plans on salvaging the equipment at the end of four years for $86,061. The new system will increase pre-tax revenues by $152,124 per year, but pre-tax costs will also increase by $94,342 per year. The firm will be able to reduce working capital by $28,502 at the beginning of the project, but will repay this at the end of the project’s life. If the tax rate is 25 percent and the discount rate is 9.65%, what is the NPV for this project?

[Round the final answer to the nearest cent]

Expert Solution

jeff jeffy answered 5 months ago

Your firm is contemplating the purchase of a new $850,000 inventory control system. The system will...

Your firm is contemplating the purchase of a new $850,000 inventory control system. The system will be depreciated using bonus depreciation over its four-year life. It will be worth $75,000 at the end of that time. You believe that the inventory control system will allow you to increase sales by $250,000 per year but cost will go up by $40,000 per year. Also, you will have to increase net working capital by $90,000 at the beginning of the project. Net working capital will revert...

?The Templeton Manufacturing and Distribution Company of? Tacoma, Washington, is contemplating the purchase of a new...

?The Templeton Manufacturing and Distribution Company of? Tacoma, Washington, is contemplating the purchase of a new conveyor belt system for one of its regional distribution facilities. Both alternatives will accomplish the same task but the Eclipse Model is substantially more expensive than the Sabre Model and will not have to be replaced for 10? years, whereas the cheaper model will need to be replaced in just 5 years. The costs of purchasing the two systems and the costs of operating...

The Templeton Manufacturing and Distribution Company of? Tacoma, Washington, is contemplating the purchase of a new...

The Templeton Manufacturing and Distribution Company of? Tacoma, Washington, is contemplating the purchase of a new conveyor belt system for one of its regional distribution facilities. Both alternatives will accomplish the same task but the Eclipse Model is substantially more expensive than the Sabre Model and will not have to be replaced for 10? years, whereas the cheaper model will need to be replaced in just 5 years. The costs of purchasing the two systems and the costs of operating...

The Templeton Manufacturing and Distribution Company of Tacoma, Washington, is contemplating the purchase of a new...

The Templeton Manufacturing and Distribution Company of Tacoma, Washington, is contemplating the purchase of a new conveyor belt system for one of its regional distribution facilities. Both alternatives will accomplish the same task but the Eclipse Model is substantially more expensive than the Sabre Model and will not have to be replaced for 10 years, whereas the cheaper model will need to be replaced in just 5 years. The costs of purchasing the two systems and the costs of operating...

Alt's is contemplating the purchase of a new $218,000 computer-based order entry system. The system will...

Alt's is contemplating the purchase of a new $218,000 computer-based order entry system. The system will be depreciated straight-line to zero over the system's five-year life. The system will be worth $20,000 at the end of five years. The company will save $73,500 before taxes per year and will reduce working capital by $15,800 at the beginning of the project. The net working capital will return to its original level when the project ends. The tax rate is 21 percent....

Your firm is contemplating the purchase of a new $700,000 computer-based entry system. The system will...

Your firm is contemplating the purchase of a new $700,000 computer-based entry system. The system will be depreciated straight-line to zero over its five year life. It will be worth $60,000 at the end of that time. You will need to increase your working capital by $81,000 by purchasing additional inventory at the beginning of the project (this is a one-time increase). The tax rate is 34 percent and the required return on the project is 15 percent. If the...

Your firm is contemplating the purchase of a new $595,000 computer-based order entry system. The system...

Your firm is contemplating the purchase of a new $595,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $63,000 at the end of that time. You will save $225,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $78,000 (this is a one-time reduction). If the tax rate is 23 percent, what is the IRR for this project? (Do...

Your firm is contemplating the purchase of a new $630,000 computer-based order entry system. The system...

Your firm is contemplating the purchase of a new $630,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $70,000 at the end of that time. You will save $260,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $85,000 (this is a one-time reduction). If the tax rate is 25 percent, what is the IRR for this project? (Do...

Your firm is contemplating the purchase of a new $518,000 computer-based order entry system. The system...

Your firm is contemplating the purchase of a new $518,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $50,400 at the end of that time. You will be able to reduce working capital by $70,000 (this is a one-time reduction). The tax rate is 24 percent and your required return on the project is 23 percent and your pretax cost savings are $164,550 per year. What is the...

Your firm is contemplating the purchase of a new $585,000 computer-based order entry system. The system...

Your firm is contemplating the purchase of a new $585,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $73,000 at the end of that time. You will save $180,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $88,000 (this is a one-time reduction). If the tax rate is 22 percent, what is the IRR for this project? NPV...

Question