Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: You must estimate a proposal to purchase a new milling machine. The base price is dollar 108,000, and shipping and installation price would add another dollar 12,500. The machine falls into the MACRS three year class, and it would be sold after three years for dollar 65,000. The applicable depreciation rates are 33, 45, 15, and 7 percent as discussed in Appendix 12A. The machine would require a dollar 5,500 increase in working capital [increased inventory less increased accounts payable]. There would be no effect on revenues, but pre-tax labor costs would decline by dollar 44,000 per year. The marginal tax rate is 35%, and the WACC is 12%. Also, the firm spent dollar 5,000 last years investigating the feasibility of using the machine.

[A] How should the $5,000 spent last year be handled?

[B] find out the net cost of the machine for capital budgeting purposes, that is, the Year 0 project cash flow?

[C] Determine the net operating cash flows during Years 1, 2, & 3?

[D] find out the terminal year cash flow?

[E] Should the machine be purchased? describe.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M918081

Have any Question? 


Related Questions in Basic Finance

Describe the common definitions of inflows of cash and

Describe the common definitions of "inflows of cash" and "outflows of cash" used by analysts to classify certain balance sheet changes and income statement values. What three categories of cash flow are used in the state ...

Boeing is using world-class manufacturing facilities in

Boeing is using world-class manufacturing facilities in Japan to supply components for its new Dreamliner. Should Boeing consider building production plants in countries like India and China, where there are many excelle ...

1 why might it be argued that corporations do not have a

1. Why might it be argued that corporations do not have a comparative advantage when investing in real estate as a means of diversification from the core business? 2. How does the analysis of a sale-leaseback differ from ...

Analyze print communication-find an example of print

Analyze print communication:- Find an example of print communication, for example, a flyer on campus, a newsletter, or a magazine ad. With a partner, discuss why the creator of the message may have chosen a print medium. ...

Look at the formula for the present value of an annuity

Look at the formula for the present value of an annuity. What happens to its value as the number of periods increases? What distinguishes an annuity from a perpetuity? Why is there no future value of a perpetuity?

Use primary and secondary sources to write a report about

Use primary and secondary sources to write a report about your future career. Explore a career position that interests you. Determine the job outlook, present level of employment, salary trends, typical responsibilities, ...

Borachera is a major spanish wine wholesaler currently

Borachera is a major Spanish wine wholesaler currently operating two CDCs in Salamanca and Albacete, and a number of RDCs all over the Iberian peninsula. In order to reduce its overall logistics cost, the company wishes ...

1 what is meant by purchasing authority give examples of

1. What is meant by purchasing authority? Give examples of each type of purchasing authority. 2. Discuss the liability issues associated with purchasing agents' actions. Minimum 3 references.

Internationalization of human resources at obirenowned for

Internationalization of human resources at OBI Renowned for its orange big box stores, OBI is one of the leading DIY/home improvement retail brands in Europe. Founded in Germany in 1970, the company currently operates ab ...

Using financial data from an appropriate source eg yahoo

Using financial data from an appropriate source (e.g. Yahoo Finance, Google Finance, annual reports, etc.), calculate the operating and cash conversion cycles for Darden Restaurants (ticker DRI). Explain what your answer ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen