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

1 what information is contained in each of the

1. What information is contained in each of the supplementary sections of the research report? 2. How are the levels of the headings of a research report determined? 3. Summarize the writing and stylistic goals that can ...

The spot rate for the danish krone is usd01500 and the

The spot rate for the Danish krone is USD0.1500 and the three-month forward rate is USD0.1505. Your company is prepared to speculate that the Danish krone will move to USD0.1650 by the end of three months. (a) Are the qu ...

Classify all of your spending into categories such as car

Classify all of your spending into categories such as car, rent, school expenses, clothing, and entertainment. Determine the proportion of your cash outflows that are allocated toward each of these categories. Describe t ...

List and briefly explain the important contributions

List and briefly explain the important contributions provided by futures exchanges ? How do locals differ from commission brokers? How do the latter differ from futures commission merchants? Explain the basic differences ...

Faro technologies whose products whose products include

FARO Technologies, whose products, whose products include portable 3D measurement equipment, recently had 17 million shares outstanding trading at $42 a share. Suppose the company announces its intention to raise $200 mi ...

Examine the following pairs of puts which differ only by

Examine the following pairs of puts, which differ only by exercise price. Determine if any violate the rules regarding relationships between American options that differ only by exercise price. a. August 155 and 160 b. O ...

Fresh fruit inc has a 1000 par value bond that is currently

Fresh Fruit, Inc. has a $1,000 par value bond that is currently selling for $1,277. it has an annual coupon rate of 12.86 percent, paid semiannually, and has 28-years remaining until maturity. What would the annual yield ...

The 2012 year-end adjusted balances taken from the general

The 2012 year-end adjusted balances taken from the general ledger of Cooperstown Services, Inc. are listed below in general ledger order. Coopertown Suppliers, Inc. DR CR Cash $12,950 Accounts receivable 28,150 Supplies ...

During 2015 rainbow umbrella corp had sales of 920000 cost

During 2015, Rainbow Umbrella Corp. had sales of $920,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $610,000, $125,000, and $155,000, respectively. In addition, the company ...

1 what is the risk insured by private mortgage insurance2

1. What is the risk insured by private mortgage insurance? 2. What are the principal features of an affordable housing loan qualification, and how are they different from those of recent temporary "Making Homes Affordabl ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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