Determine the net after-tax cash flows

Assignment Help Finance Basics
Reference no: EM131941306

Question: An auto-part manufacturing company is considering the purchase of an in- dustrial robot to do spot welding, which is currently done by skilled labor. The initial cost of the robot is $250,000, and the annual labor savings are projected to be $125,000. If purchased, the robot will be depreciated under MACRS as a seven-year recovery property. this robot will be used for five years after which the firm expects to sell it for $50,000. The company's marginal tax rate is 35% over the project period.

(a) Determine the net after-tax cash flows for each period over the project life.

(b) Is this a good investment at MARR of 15%?

Reference no: EM131941306

Questions Cloud

Find the receipt showing the cost basis of industrial oven : During an audit of ABC company an IRS agent could not find the receipt showing the cost basis of an industrial oven.
From what country should you buy ethanol : The spot US-CA exchange rate is $0.90USD and the CA-MX exchange rate is 16?. From what country should you buy your ethanol and how much can you afford to buy?
Calculate the cash flows and final payments : Calculate the US dollar cash flows and final payments. Calculate the Australian dollar cash flows and the final receipts from this arrangement.
What estimate did the capm yield : The average rate of return on a stock was calculated to be 18.4%. The DCF method yielded 21%, while the rd +RP method yielded 14%.
Determine the net after-tax cash flows : An auto-part manufacturing company is considering the purchase of an in- dustrial robot to do spot welding, which is currently done by skilled labor.
Brief description of current reporting rules for leases : You are an audit senior for Burns & Allen, LLP. One of the audit partners received a call from Brenda Parker, CFO of a publicly traded client.
What is the lifetime value of a super premium customer : What is the lifetime value of a Super Premium customer? What is the lifetime value of an average customer?
What will be the percent markup on cost : AutoPartsWarehouse purchases chrome rims for $710 (for a set of 4) and uses a markup of 55% on selling price. What will be the percent markup on cost?
What is avery wacc : Avery Corporation's target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%.

Reviews

Write a Review

Finance Basics Questions & Answers

  Describe the balance-of-payments identity

Describe the balance-of-payments identity and discuss its implications under the fixed and flexible exchange rate regimes.

  What is the volume hurdle

Instead of a sale management is considering a price increase to $59. What would be the maximum allowable loss in the number of units sold?

  What is the default risk premium on the corporate bond

Assume that the liquidity premium on the corporate bond is 0.3%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.

  What was mountain air''s net income for fiscal

What was Mountain Air's net income for fiscal 2012? How many new shares did the corporation issue and sell during the year? At what average price per share did the new stock sold during 2012 sell? At what price per share did Mountain Air's original 5..

  What is the effective annual rate on loan

What will your monthly payments be? What is the effective annual rate on this loan??

  Strategic analysis-organizational-competitive

The goal of conducting a competitor analysis is to gather information about the company's competitors and systematically formulate a strategy to become the market leader in the industry.

  How many new shares will be issued and at what price

Do you lose or gain from triggering the poison pill? If you lose, where does the loss go (who benefits)? If you gain, from where does the gain come (who loses)?

  What will be your annual return on $100 invested in fund

What will be your annual return on $100 invested in her fund if she allows you to reinvest in her fund the 1% you earn each day?

  Which is the better deal

If you haggle with the salesperson, you can buy the car for 22,500, but you will have to finance through the bank at 6.5%apr (compounded monthly). If you want to pay the car off in 5 yrs, which is the better deal?(Compare monthly payments)

  What is the internal growth rate

Neal's Nails has an 11% return on assets and a 30% dividend payout ratio. What is the internal growth rate?

  What is jack weighted average cost of capital

The U.S. Treasury bill is yielding 6 percent and the market risk premium is 9 percent. Jack's tax rate is 35 percent. What is Jack's weighted average cost of capital?

  Offset the charges assessed against the bank

How much would this bank have available in credits at the Federal Reserve Bank in its district to help offset the charges assessed against the bank

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd