Managerial Finance Week 5

Managerial Finance FI515_W5_Project 11 7You have been asked by the president of your company to evaluate the proposed acquisition of a immature set spectrometer for the levels R&D department. The equipments basic price is $70,000, and it would be another $15,000 to interpolate it for surplus use by your firm. The spectrometer, which falls into the MACRS 3- form class, would be exchange after 3 historic period for $30,000. mapping of the equipment would require an amplify in pull in working capital (spare parts inventory) of $4,000. The spectrometer would have no depression on revenues, but it is pass judgment to save the firm $25,000 per year in before-tax operate costs, mainly labor. The firms marginal federal-plus-state tax rate is 40%. Equipment price= $70,000 special Cost= $15,000 Salvage Cost (year 3)= $30,000 profit in NWC= $4,000 nest egg (per year)=$25,000 revenue enhancement rate:= 40% a. What is the unclutter cost of t he spectrometer? (That is, what is the socio-economic class-0 net immediate payment liquify?) Equipment=-70,000 Additional Cost=-15,000 Inc in NWC=-4,000 Net Cost=-$89,000 b. What are the net operating cash take to the woodss in Years 1, 2, and 3? in operation(p) money Flows derogation:Amount to be depreciated = 70,000 + 15,000 = $85,000 YearDepreciation % Depreciation/year (MACR 3-year)(85,000 x %) 133.33%28,331 244.

45%37,783 ------------------------------------------------- 314.81%12,589 Total $78,703 Book Value @ end of 3 years:$6,297 Continued on next page. Operating money Flow Year123 Savings25,00025,00025,000 - Depreciation28,33137,78312,589 Savi ng -Dep(3,331)(12,783)12,411 Tax1,3325,113(! 4,964) After-tax Oper Inc(1,998)(7,670)7,447 ------------------------------------------------- +Depreciation28,33137,78312,589 Net Cash Flows$26,333$30,113$20,036 c. What is the additional (non-operating) cash flow in Year 3? Non-operating cash flow year 3. Salvage Value = $30,000 *...If you want to get a sufficient essay, order it on our website: OrderEssay.net

If you want to get a full information about our service, visit our page: write my essay