The campbell company is evaluating the proposed acquisition, Ask an Expert

Finance

The Campbell Company is evaluating the proposed acquisition of a new milling machine. The machine's base price is $108,000, and it would cost another $12,500 to modify it for special use by your firm. The machine falls into the MACRS 3 year class, and it would be sold after 3 years for $65,000. The machine would require an increase in net working capitol (inventory) of $5,500. The milling machine would have no effect on revenues, but it is expected to save the firm $44,000 per year in before-tax operating costs mainly labor. Campbell's marginal tax rate is 35 percent.

a) What is the net cost of the machine for capitol budgeting purposes? (That is what is the year 0 net cash flow?)
b) What are the net operating cash flows in years 1, 2, and 3?
c) What is the terminal year cash flow?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9879738

Have any Question?Write your Review or question?

Related Questions in Basic Finance

The seaboard shipping company has a warehouse terminal in

The Seaboard Shipping Company has a warehouse terminal in Spartanburg, South Carolina. The capacity of each terminal dock is 3 trucks. As trucks enter the terminal, the drivers receive numbers, and when one of the three ...

Assume the gold price is usd1500 per ounce the nine-month

Assume the gold price is USD1500 per ounce, the nine-month interest rate is 3.25% p.a. and the gold lending rate is 0.75% p.a. What is the nine-month forward gold price?

Suppose the after-tax free cash flows for a proposed

Suppose the after-tax free cash flows for a proposed acquisition are $11.55/year in perpetuity and that it was deemed that the appropriate WACC should be based on a capital structure of 25 percent debt and 75 percent equ ...

Researchers at the university of pennsylvania school of

Researchers at the University of Pennsylvania School of Medicine have determined that children under 2 years old who sleep with the lights on have a 35% chance of becoming myopic before they are 16. Children who sleep in ...

Jane and john doe are twinsnbspjane saves 10000 per year

Jane and John Doe are twins. Jane saves $10,000 per year from age 25 to 34 and nothing from age 35 onward (10 years of saving in total). John saves nothing from age 25 to 34 and $10,000 from age 35 to 64 (30 years of sav ...

A credit unions rate-climber gic pays rates of 2 6 and 8

A credit union's Rate-Climber GIC pays rates of 2%, 6%, and 8% compounded semiannually in successive years of a three-year term. How much interest will be earned in the second year, if $18,000 is invested in this GIC?

Firstly a systematic risk is one that deals with a large

Firstly a systematic risk is one that deals with a large number of assets and can also be labeled as a market risk, on the other hand a non systematic risk is quite the opposite in that it deals with only a small number ...

The following information relates to ram

The following information relates to RAM Corporation: Accounts receivable $160,000 Total credit sales $2,500,000 Accounts payable ...

On january 11998 the total assets of the mccue company were

On January 1,1998, the total assets of the McCue company were $270 million. The first present capital structure, which follows, is considered optimal. Assume that they have no short-term debt. Long-term debt ...

Based on your review of the financial statements of company

Based on your review of the financial statements of Company A and B, suggest a key insight about the financial health of the companies.

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert