Should the spectrometer be purchased

Assignment Help Finance Basics
Reference no: EM131102234

ou have been asked by the president of your company to evaluate the proposed acquisition of a new spectrometer for the firms R&D department. The equipments 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 $4000. The spectrometer would have no effect on revenues, but it is expected to save the firm $25,000 per year in before tax operating cost, mainly labor. The firm's marginal federal-plus-state tax rate is 40%. If the project's cost of capital is 10%, should the spectrometer be purchased?

Reference no: EM131102234

Questions Cloud

Should the firm accept the project : Should the firm accept the project? If total costs consisted of a fixed cost of $10,000 per year and variable costs of $95 per unit, and if only the variable costs were expected to increase with inflation, would this make the project better or worse?..
Use accounting information : What kinds of organizations, in addition to businesses, use accounting information?
Responsibility of working with organization : You have been given the responsibility of working with your organization's CEO to do a competitive market analysis of the potential success of one of their existing products.
Null hypothesis that true average survival time : The article "The Effect of Enzyme Inducing Agents on the Survival Times of Rats Exposed to Lethal Levels of Nitrogen Dioxide" (Toxicology and Applied Pharmacology, 1978: 169-174) reports the following data on survival times for rats exposed to nit..
Should the spectrometer be purchased : The spectrometer would have no effect on revenues, but it is expected to save the firm $25,000 per year in before tax operating cost, mainly labor. The firm's marginal federal-plus-state tax rate is 40%. If the project's cost of capital is 10%, shoul..
Determine the force in member dg of the compound truss : The joints all lie on radial lines subtending angles of 15° as indicated, and the curved members act as two-force members. Distance R.
What is meant by this description : Accounting is sometimes described as the language of business. What is meant by this description?
Determine the muzzle speed of the bullet : A projectile is fired from the platform at B. The shooter fires his gun from point A at an angle 30° of . Determine the muzzle speed of the bullet if it hits the projectile at C
What is the net cost of the machine for capital budgeting : What is the net cost of the machine for capital budgeting purposes? (That is, what is the Year 0 net cash flow?) What are the net operating cash flows in Years 1, 2, and 3? What is the terminal year cash flow? If the project's cost of capital is 12 p..

Reviews

Write a Review

 

Finance Basics Questions & Answers

  A the relative expected return on dollar assets increases

1 as the relative expected return on dollar assets increases foreigners will want to hold more assets and less

  What is the present value of 100 to be received in 3 years

1. what is the future value of an initial 100 after 3 years if it is invested in an account paying 10 percent annual

  Q1 you are presented the investment in local business for

q1. you are presented the investment in local business for 500000 also told that business can be sold after 1 year.

  Compute the dealer''s expected carry income

Compute the dealer's expected carry income - Based on the above results, is it always good for the dealer when interest rates rise? How about when they fall? Please explain.

  What is the cost of the trade credit

If you pay the bill on the 50th day after the purchase, what is the cost of the trade credit you have used for the 35-day period after the discount period ended

  How would you use money market instruments

How would you use money market instruments (borrowing and lending) to profit? Which alternatives (forward contracts or money market instruments) would you prefer? Why?

  Which of the following statements is true about r-squared

Which of the following statements is true about R-squared?

  Analyze the measures of liquidity

Analyze the measures of liquidity

  Byron inc has total current assets of 800000 long-term

byron inc. has total current assets of 800000 long-term debt of 200000 total current liabilities of 450000 and

  Analyzing the past monthly movements in ibm''s stock price

Analyze the past monthly movements in IBM's stock

  What are possible drawbacks associated with seeking advice

What are possible drawbacks associated with seeking advice from a financial planning professional? How might these concerns be minimized?

  Analysis of variances in cost of common equity and cost of

analysis of variances in cost of common equity and cost of retained earnings.cost of capital coleman technologies is

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd