New Project Analysis Of Spectrometer ($70000)

Acquisition of new spectrometer Problem 11-7 (A Relevant discipline: Equipment Base Price : pass for call monetary value: serviceable Capital for subprogram: $70,000.00 $15,000.00 $4,000.00 $89,000.00 path 0 Net tack Flow : ($89,000.00) negative since this is the flirt of the equipment and all associated be to salute into operation (B disparagement Base price of summation : Modification/Use Cost: wear and teardrop Base $ 70,000.00 $15,000.00 $ 85,000.00 Working outstanding for role not include since addition valuation is ground upon cost of asset and be related to bring asse run currency Flows Revenue - outlays EBDT - derogation EBT - evaluatees (40% Rate) After valuate direct profit + wear and tear immediate payment Flow Year 1 $0.00 ($25,000.00) $25,000.00 $ 28,050.00 ($3,050.00) ($1,220.00) ($1,830.00) $ 28,050.00 $26,220.00 Alternative calculation: Tax Rate : 40% Expense savings : $ 25,000.00 disparagement (see supra in N16, N17, N18) Year 1 Post Tax Savings: $ 15,000.00 Year 2 $ 15,000.00  immediate payment shielded by dint of derogation cash Flow $ 11,220.00 $ 26,220.00 $ 15,300.00 $ 30,300.00 (C Additional (non-operating) hard currency flow in twelvemonth 3 Salvage revalue : Book range of Asset in Year 4 Tax on salvage value : Increase in NWC : Total pacify cash flows : $ 30,000.00 $ 5,950.00 $ (9,620.00) $ 4,000.00 $ 24,380.

00 (D Year 0 1 2 3 Cost of capital : Plugging these values in Finacial Calculator Yields an NPV of: 10% Cash Flow ($89,000.00) $26,220.00 $30,300.000 $ 44,480.00 Calculator Inputs CF0 CF1 CF2 CF3 I -6703.3831 Since the NPV is negative, the spectrometer should not be purchased When work out NPV in Excel : ($6,703.83) Value is still negative, and ratiocination still holds - do not purchase. Depreciation Table Year 1 2 3 4 Depreciation Base $ 85,000.00 $ 85,000.00 $ 85,000.00 $ 85,000.00 MACRS% 0.33 0.45 0.15 0.07 Depreciation $ 28,050.00 $ 38,250.00 $ 12,750.00 $ 5,950.00 and costs related to bring asset to use Year 2 $0.00...If you privation to get a honest essay, order it on our website: Orderessay

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