Hello,Can you please help with this question? I must be done in EXCEL format and I need the formulas that used to arrive at the answers so that I get an understanding of what I need to do. Thank you **Answer to 12.9 (Problem 3)****New Project Analysis****Scenario:** You must evaluate a proposal to buy a new milling machine.- **Base Price:** $135,000- **Shipping and Installation Costs:** Additional $8,000- **Depreciation:** Falls into the MACRS 3-year class with applicable rates of 33%, 45%, 15%, and 7%.- **Resale Value after 3 years:** $94,500- **Working Capital:** Requires a $5,000 increase in net operating working capital.- **Cost Savings:** Pretax labor costs would decline by $52,000 per year.- **Tax Rate:** Marginal tax rate is 35%.- **Weighted Average Cost of Capital (WACC):** 8%- **Feasibility Study Cost:** $4,500 spent last year.**Questions:**a. How should the $4,500 spent last year be handled?b. What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow?c. What are the project’s annual cash flows during Years 1, 2, and 3?d. Should the machine be purchased? Explain your answer.

Answered: Image /qna-images/answer/82e2163d-dab7-4278-815b-ec24b2623c74.jpg

a. How should the $4,500 spent last year be handled? b. What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? c. What are the project's annual cash flows during Years 1, 2, and 3? d. Should the machine be purchased? Explain your answer.

a. How should the $4,500 spent last year be handled? b. What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? c. What are the project's annual cash flows during Years 1, 2, and 3? d. Should the machine be purchased? Explain your answer.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Hello,

Can you please help with this question? I must be done in EXCEL format and I need the formulas that used to arrive at the answers so that I get an understanding of what I need to do. Thank you

**Answer to 12.9 (Problem 3)**

**New Project Analysis**

**Scenario:** You must evaluate a proposal to buy a new milling machine.

- **Base Price:** $135,000
- **Shipping and Installation Costs:** Additional $8,000
- **Depreciation:** Falls into the MACRS 3-year class with applicable rates of 33%, 45%, 15%, and 7%.
- **Resale Value after 3 years:** $94,500
- **Working Capital:** Requires a $5,000 increase in net operating working capital.
- **Cost Savings:** Pretax labor costs would decline by $52,000 per year.
- **Tax Rate:** Marginal tax rate is 35%.
- **Weighted Average Cost of Capital (WACC):** 8%
- **Feasibility Study Cost:** $4,500 spent last year.

**Questions:**
a. How should the $4,500 spent last year be handled?
b. What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow?
c. What are the project’s annual cash flows during Years 1, 2, and 3?
d. Should the machine be purchased? Explain your answer.

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