Fin 515 Week 5 Project

%Week 5 externalise FIN515 11-7) New-Project Analysis You obtain been asked by the chair of your company to evaluate the proposed acquirement of a new bundle mass mass spectrometer for the rigids R&D department. The equipments basic outlay is $70,000, and it would comprise another $15,000 to deepen it for excess use by your firm. The spectrometer, which falls into the MACRS 3- category class, would be sell aft(prenominal) 3 years for $30,000. expenditure of the equipment would require an increase in moolah working uppercase (sp ar parts inventory) of $4,000. The spectrometer would have no mental picture on revenues, but it is evaluate to publish the firm $25,000 per year in before- taxation operating appeals, primarily labor. The firms b are(a) federal-plus-state tax rate is 40%. a. What is the net cost of the spectrometer? (That is, what is the course of instruction-0 net flying payment mix?) b. What are the net operating hard currency hang ups in years 1, 2, and 3? c. What is the additional (nonoperating) notes flow in socio-economic class 3? d. If the projects cost of capital is 10%, should the spectrometer be purchased?

Answers- A) Net court after family 0 Equipment| ($70,000)| Modifications| ($15,000)| supererogatory Net smashing postulate| ($4,000)| Total Net be ( class-0)| ($89,000)| B) Operating Cash flow for Year 1-3 | Year 1| Year 2| Year 3| After tax-cost savings| $15,000 | $15,000 | $15,000 | Depreciation| $28,050 | $38,250 | $12,750 | Depreciation tax savings| $11,220.0 | $15,300.0 | $5,100.0 | | | | | Operating bullion flow| $26,220 | $30,300.0 | $20,100.0 | C) Additional (nonoperating) cash flow in Year 3 Salvage Value| $30,000 | tax on Salvage consecrate | $9,620 | Net Working Capital recovery| $4,000 | | | Cash become for| $24,380 | D) If the projects cost of capital is 10%, should the spectrometer be purchased? | Year 0| Year 1 | Year 2| Year 3| Cash Flow| -89,000| 26,220| 30,300| 44,480| salute of Capital| 10%| | | | | | | | | NPV| ($6,703.83)| | | |...If you hope to get a vast essay, order it on our website: Ordercustompaper.com

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