Calculating initial cash flow DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposedcomputer-controlled automatic-feed roaster will be $139,000. The firm has a chance to sell its 4-year-old roaster for $35,200. The existing roaster originally cost$59,400 and was being depreciated using MACRS and a 7-year recovery period (see the table). DuPree is subject to a 21% tax rate.a. What is the book value of the existing roaster?b. Calculate the after-tax proceeds of the sale of the existing roaster.c. Calculate the change in net working capital using the following figures:Anticipated Changes in Current Assets andCurrent LiabilitiesAccrualsInventoryAccounts payableAccounts receivable- $19,300+49,300+40,900+69,400CashNotes payabled. Calculate the initial cash flow associated with the proposed new roaster.0+15,300a. The remaining book value of the existing roaster is $ (Round to the nearest dollar.)b. The after-tax proceeds of the sale of the existing roaster will be $c. The change in net working capital will be $(Round to the nearest dollar.)d. The initial cash flow associated with the proposed new roaster will be $. (Round to the nearest dollar.)(Round to the nearest dollar.)

The book value of assets is the total value of asset after accounting for accumulated depreciation.…

Answered: Calculating initial cash flow DuPree…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 2CE

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Calculating initial cash flow DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be $140,000. The firm has a chance to sell its 5-year-old roaster for $34,200. The existing roaster originally cost $60,300 and was being depreciated using MACRS and a 7-year recovery period (see the table). DuPree is subject to a 21% tax rate. a. What is the book value of the existing roaster? b. Calculate the after-tax proceeds of the sale of the existing roaster. c. Calculate the change in net working capital using the following figures: Anticipated Changes in Current Assets and Current Liabilities Accruals Inventory Accounts payable Accounts receivable - $19,000 +49,600 +40,700 + 69,100 (Round to the nea a. The remaining book value of the existing roaster is $ b. The after-tax proceeds of the sale of the existing roaster will be $ (Rour c. The change in net working capital will be $ . (Round to…

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