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In: Finance
Problem 11-7 New-Project Analysis The president of the company you work for has asked you to...
Problem 11-7 New-Project Analysis The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firm’s R&D department The equipment's basic price is $60,000, and it would cost another $15,000 to modify it for special use by your firm. The chromatograph, which falls into the MACRS 3-year class, would be sold after 3 years for $15,000. Use of the equipment would require an increase in net working capital (spare parts inventory) of $3,600. The machine would have no effect on revenues, but it is expected to save the firm $18,000 per year in before-tax operating costs, mainly labor. The firm's marginal federal-plus-state tax rate is 40%. What is the Year-0 net cash flow? If the answer is negative, use minus sign. $ What are the net operating cash flows in Years 1, 2, and 3? Round your answers to the nearest dollar. Year 1 $ Year 2 $ Year 3 $ What is the additional (nonoperating) cash flow in Year 3? Round your answer to the nearest dollar. $ If the project's cost of capital is 11%, should the chromatograph be purchased?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Problem 11-7 New-Project Analysis The president of the company you work for has asked you to...
Problem 11-7 New-Project Analysis The president of the company
you work for has asked you to evaluate the proposed acquisition of
a new chromatograph for the firm’s R&D department The
equipment's basic price is $120,000, and it would cost another
$30,000 to modify it for special use by your firm. The
chromatograph, which falls into the MACRS 3-year class, would be
sold after 3 years for $42,000. Use of the equipment would require
an increase in net working capital (spare...
Problem 11-7 New-Project Analysis The president of the company you work for has asked you to...
Problem 11-7
New-Project Analysis
The president of the company you work for has asked you to
evaluate the proposed acquisition of a new chromatograph for the
firm’s R&D department The equipment's basic price is $120,000,
and it would cost another $30,000 to modify it for special use by
your firm. The chromatograph, which falls into the MACRS 3-year
class, would be sold after 3 years for $42,000. Use of the
equipment would require an increase in net working capital (spare...
Problem 11-07 New-Project Analysis The president of the company you work for has asked you to...
Problem 11-07
New-Project Analysis
The president of the company you work for has asked you to
evaluate the proposed acquisition of a new chromatograph for the
firm’s R&D department. The equipment's basic price is $70,000,
and it would cost another $10,500 to modify it for special use by
your firm. The chromatograph, which falls into the MACRS 3-year
class, would be sold after 3 years for $31,500. The MACRS rates for
the first 3 years are 0.3333, 0.4445 and 0.1481....
Problem 11-07 New-Project Analysis The president of the company you work for has asked you to...
Problem 11-07
New-Project Analysis
The president of the company you work for has asked you to
evaluate the proposed acquisition of a new chromatograph for the
firm’s R&D department. The equipment's basic price is $130,000,
and it would cost another $19,500 to modify it for special use by
your firm. The chromatograph, which falls into the MACRS 3-year
class, would be sold after 3 years for $45,500. The MACRS rates for
the first 3 years are 0.3333, 0.4445 and 0.1481....
Problem 11-07 New-Project Analysis The president of the company you work for has asked you to...
Problem 11-07 New-Project Analysis The president of the company
you work for has asked you to evaluate the proposed acquisition of
a new chromatograph for the firm’s R&D department. The
equipment's basic price is $200,000, and it would cost another
$30,000 to modify it for special use by your firm. The
chromatograph, which falls into the MACRS 3-year class, would be
sold after 3 years for $50,000. The MACRS rates for the first 3
years are 0.3333, 0.4445 and 0.1481....
New-Project Analysis The president of the company you work for has asked you to evaluate the...
New-Project Analysis
The president of the company you work for has asked you to
evaluate the proposed acquisition of a new chromatograph for the
firm’s R&D department. The equipment's basic price is $76,000,
and it would cost another $18,500 to modify it for special use by
your firm. The chromatograph, which falls into the MACRS 3-year
class, would be sold after 3 years for $30,600. The MACRS rates for
the first 3 years are 0.3333, 0.4445 and 0.1481. Use of...
New-Project Analysis The president of the company you work for has asked you to evaluate the...
New-Project Analysis
The president of the company you work for has asked you to
evaluate the proposed acquisition of a new chromatograph for the
firm’s R&D department. The equipment's basic price is $76,000,
and it would cost another $18,500 to modify it for special use by
your firm. The chromatograph, which falls into the MACRS 3-year
class, would be sold after 3 years for $30,600. The MACRS rates for
the first 3 years are 0.3333, 0.4445 and 0.1481. Use of...
New-Project Analysis The president of the company you work for has asked you to evaluate the...
New-Project Analysis
The president of the company you work for has asked you to
evaluate the proposed acquisition of a new chromatograph for the
firm’s R&D department. The equipment's basic price is $100,000,
and it would cost another $25,000 to modify it for special use by
your firm. The chromatograph, which falls into the MACRS 3-year
class, would be sold after 3 years for $35,000. The MACRS rates for
the first 3 years are 0.3333, 0.4445 and 0.1481. Use of...
New-Project Analysis The president of the company you work for has asked you to evaluate the...
New-Project Analysis
The president of the company you work for has asked you to
evaluate the proposed acquisition of a new chromatograph for the
firm’s R&D department. The equipment's basic price is $70,000,
and it would cost another $18,000 to modify it for special use by
your firm. The chromatograph, which falls into the MACRS 3-year
class, would be sold after 3 years for $29,700. The MACRS rates for
the first 3 years are 0.3333, 0.4445 and 0.1481. Use of...
New-Project Analysis The president of the company you work for has asked you to evaluate the...
New-Project Analysis
The president of the company you work for has asked you to
evaluate the proposed acquisition of a new chromatograph for the
firm’s R&D department. The equipment's basic price is $60,000,
and it would cost another $15,000 to modify it for special use by
your firm. The chromatograph, which falls into the MACRS 3-year
class, would be sold after 3 years for $27,000. The MACRS rates for
the first 3 years are 0.3333, 0.4445 and 0.1481. Use of...
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