You have been asked by the president of your company to evaluate the proposed acquisition of a newspecial-purpose truck for $50,000. The truck falls into the MACRS 3-year class, is not eligible for eitherbonus depreciation or Section 179 expensing, and it will be sold after three years for $19,400. Use of thetruck will require an increase in NWC (spare parts inventory) of $1,400. The truck will have no effect onrevenues, but it is expected to save the firm $17,100 per year in before-tax operating costs, mainly labor.The firm's marginal tax rate is 21 percent.What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign.Round your answers to 2 decimal places.)YearFCF0123

SOLUTION:Year 0:The initial outlay for the project is $50,000. This includes the cost of the truck,…

Answered: You have been asked by the president of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 14P

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Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace this printer in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculate yearly depreciation using the double-declining-balance method.
You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, is not eligible for either bonus depreciation or Section 179 expensing, and it will be sold after three years for $19,200. Use of the truck will require an increase in NWC (spare parts inventory) of $1,200. The truck will have no effect on revenues, but it is expected to save the firm $20,600 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 21 percent. What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Year FCF $ 0 X Answer is complete but not entirely correct. (61,200.00) $ 1 20,473.58 $ 2 21,874.70 $ 3 34,241.72 x
You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, is not eligible for either bonus depreciation or Section 179 expensing, and it will be sold after three years for $19,200. Use of the truck will require an increase in NWC (spare parts inventory) of $1,200. The truck will have no effect on revenues, but it is expected to save the firm $20,600 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 21 percent. What will the cash flows for this project be? Note: Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. Answer is complete but not entirely correct. Year 0 1 2 3 FCF $ (61,200.00) S 16,274 00 S 16,274 00 S 31,442.00 X
You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, is not eligible for either bonus depreciation or Section 179 expensing, and it will be sold after three years for $20,600. Use of the truck will require an increase in NWC (spare parts inventory) of $2,600. The truck will have no effect on revenues, but it is expected to save the firm $20,200 per year in before-tax operating costs, mainly labor. The firm’s marginal tax rate is 21 percent.What will the cash flows for this project be?
You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, is not eligible for either bonus depreciation or Section 179 expensing, and it will be sold after three years for $20,600. Use of the truck will require an increase in NWC (spare parts Inventory) of $2,600. The truck will have no effect on revenues, but it is expected to save the firm $20,200 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 21 percent. What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) FCF Year 0 1 Domenlelle Anal 2 teninte Cumali Ehemalia E UPORNO 3
You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, is not eligible for either bonus depreciation or Section 179 expensing, and it will be sold after three years for $19,500. Use of the truck will require an increase in NWC (spare parts inventory) of $1,500. The truck will have no effect on revenues, but it is expected to save the firm $20,500 per year in before-tax operating costs, mainly labor. The firm’s marginal tax rate is 21 percent.What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)
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