Question

NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base...

NEW PROJECT ANALYSIS

You must evaluate a proposal to buy a new milling machine. The base price is $176,000, and shipping and installation costs would add another $8,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $123,200. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $6,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $60,000 per year. The marginal tax rate is 35%, and the WACC is 12%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine.

What are the project's annual cash flows during Years 1, 2, and 3? Round your answer to the nearest cent. Do not round your intermediate calculations.

Year 1:

Year 2:

Year 3:

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base...
NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base price is $188,000, and shipping and installation costs would add another $11,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $65,800. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $4,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on...
You must evaluate a proposal to buy a new milling machine. The base price is $184,000,...
You must evaluate a proposal to buy a new milling machine. The base price is $184,000, and shipping and installation costs would add another $10,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $82,800. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $6,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...
You must evaluate a proposal to buy a new milling machine. The base price is $184,000,...
You must evaluate a proposal to buy a new milling machine. The base price is $184,000, and shipping and installation costs would add another $10,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $82,800. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $6,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...
You must evaluate a proposal to buy a new milling machine. The base price is $102,000,...
You must evaluate a proposal to buy a new milling machine. The base price is $102,000, and shipping and installation costs would add another $18,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $66,300. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $4,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...
NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base...
NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base price is $138,000, and shipping and installation costs would add another $20,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $75,900. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $9,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on...
You must evaluate a proposal to buy a new milling machine. The base price is $148,000,...
You must evaluate a proposal to buy a new milling machine. The base price is $148,000, and shipping and installation costs would add another $11,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $103,600. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $9,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...
You must evaluate a proposal to buy a new milling machine. The base price is $143,000,...
You must evaluate a proposal to buy a new milling machine. The base price is $143,000, and shipping and installation costs would add another $7,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $50,050. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $9,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...
You must evaluate a proposal to buy a new milling machine. The base price is $177,000,...
You must evaluate a proposal to buy a new milling machine. The base price is $177,000, and shipping and installation costs would add another $9,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $61,950. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $9,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax...
Dayman Inc. has asked you to evaluate a proposal to buy a new costume machine. The...
Dayman Inc. has asked you to evaluate a proposal to buy a new costume machine. The base price is $112,000, and shipping and installation costs would add another $25,000. The machine falls into the MACRS 3-year class, and it would be sold after another 3 years for $35,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $7,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no...
You must evaluate a proposal to buy a new milling machine. The purchase price of the...
You must evaluate a proposal to buy a new milling machine. The purchase price of the milling machine, including shipping and installation costs, is $152,000, and the equipment will be fully depreciated at the time of purchase. The machine would be sold after 3 years for $71,000. The machine would require a $3,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $55,000...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT