What are the project annual cash flows in years

Assignment Help Financial Management

Reference no: EM131179829

You must evaluate a proposed spectrometer for the R&D department. The base price is $260,000, and it would cost another $39,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $65,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an $11,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $70,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%.

What are the project's annual cash flows in Years 1, 2, and 3? Round your answers to the nearest cent

Reference no: EM131179829

Questions Cloud

Advantages and disadvantages of hiring home country : In staffing a multinational organization for service outside the IC home country, what are some advantages and disadvantages of hiring home country personnel?

Create a storyboard of the website presenting ideas : Create a storyboard of the website presenting ideas for website content, the links, and interconnections. Create visual representations of the home page, node pages, basic pages, and navigational pages.

Characteristics of physical and spiritual aspect of humanity : What might these descriptions of what humans uniquely consist of have to do with the manner in which each person orders his or her life?

What impact do benefit offerings have on marketplace : Consider the cost of benefits in major organizations. What impact do benefit offerings have on marketplace competitiveness and the ability to attract and keep quality employees? Do you think pay is the primary motivating factor for most job appli..

What are the project annual cash flows in years : You must evaluate a proposed spectrometer for the R&D department. The base price is $260,000, and it would cost another $39,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold aft..

How performance appraisals can contribute to the achievement : Write a paper describing how effective performance appraisals can increase employee performance. This paper should include sections on the strategic advantages of performance appraisals, potential forms of bias within the appraisal system, as well..

Calculate after-tax cost of debt and common equity : The following table gives Foust Company's earnings per share for the last 10 years. The common stock, 6.7 million shares outstanding, is now (1/1/15) selling for $68 per share. Calculate Foust's after-tax cost of debt. Calculate Foust's cost of commo..

Determine the design specifications of the amplifier : The desired output current is io = 20 mA at a load resistance varying from RL = 20 Ω to 500 Ω. The variation in output current should be kept within ± 3%. Determine the design specifications of the amplifier.

Calculate the return of the portfolio : We have a portfolio that is invested 70% in Asset A and 30% in Asset B. Calculate the Return of the portfolio under each of the given states of the economy. What is the overall Expected return of the portfolio? What is the standard deviation of the $..

User Account

All Pages