FIN 515 Managerial Finance Week 5 Project Complete Answer

FIN 515 Managerial Finance Week 5 Project Complete Answer

FIN 515 Managerial Finance Week 5 Project Complete Answer

FIN 515 Managerial Finance Week 5 Project Complete Answer

FIN 515 Managerial Finance Week 5 Project Complete Answer

You have been asked by the president of your company to evaluate the proposed acquisition of a new spectrometer for the firm’s R&D department. The equipment’s basic price is $70,000, and it would cost another $15,000 to modify it for special use by your firm. The spectrometer, which falls into the MACRS 3-year class, would be sold after 3 years for $30,000. Use of the equipment would require an increase in net working capital (spare parts inventory) of $4,000. The spectrometer would have no effect on revenues, but it is expected to save the firm $25,000 per year in before-tax operating costs, mainly labor. The firm’s marginal federal-plus-state tax rate is 40%.

a. What is the net cost of the spectrometer? (That is, what is the Year-0 net cash flow?)
b. What are the net operating cash flows in Years 1, 2, and 3?
c. What is the additional (non-operating) cash flow in Year 3?
d. If the project’s cost of capital is 10%, should the spectrometer be purchased?

a. What is the net cost of the spectrometer? (That is, what is the Year-0 net cash flow?)

b. What are the net operating cash flows in Years 1, 2, and 3?

c. What is the additional (non-operating) cash flow in Year 3?

Additional (non-operating) cash flow in Year 3

d. If the project’s cost of capital is 10%, should the spectrometer be purchased?

For instant digital download of the above solution, Please click on the “PURCHASE” link below to get the tutorial for FIN 515 Managerial Finance Week 5 Project Complete Answer

For instant digital download of the above solution or tutorial, please click on the below link and make an instant purchase. You will be guided to the PAYPAL Standard payment page wherein you can pay and you will receive an email immediately with a download link.

In case you find any problem in getting the download link or downloading the tutorial, please send us an email on mail@bizcourseqa.com

FIN-515-Managerial-Finance-Course_Image-_5_Project