You must evaluate a proposal to buy a new milling machine. The base price is $101,000, and shipping and installation costs would add another $8,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $35,350. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $7,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $58,000 per year. The marginal tax rate is 35%, and the WACC is 10%. Also, the firm spent $5,000 last year investigating the feasibility of using the machine.

What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? Round your answer to the nearest cent.

=$11650

What are the project's annual cash flows during Years 1, 2, and 3? Round your answer to the nearest cent.

Year 1 $

Year 2 $

Year 3 $

Long-term financing needed : At year-end 2013, Wallace Landscaping’s total assets were $1.0 million and its accounts payable were $300,000. Sales, which in 2013 were $2.4 million, are expected to increase by 30% in 2014. What was Wallace's total long-term debt in 2013? How much .. |

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What are the project annual cash flows : You must evaluate a proposal to buy a new milling machine. The base price is $101,000, and shipping and installation costs would add another $8,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $35,350. What a.. |

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Normal projects if the cost of capital is positive : Which of the following is true for normal projects if the cost of capital is positive? |

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