Reference no: EM131346855
You have been asked by the president and CEO of your firm to evaluate the proposed acquisition of a new labeling machine for the firm’s pharmacy production lines. The machine’s price is $50,000, and it would cost another $10,000 for transportation and installation. The machine falls into the MACRS three-year depreciation class, and hence the tax depreciation allowances are 0.33, 0.45, and 0.15 in years 1, 2, and 3 respectively. The machine would be sold after three years because the production line is being closed at that time. The best estimate of the machine’s salvage value after three years of use is $20,000. The machine would have no effect on the firm’s sales or revenue, but it is expected to save the firm $20,000 per year in before tax operating costs. The firm’s tax rate is 40 percent and its cost of capital is 10 percent. [show all work please]
a. What is the project’s net investment outlay at Year 0?
b. What is the project’s operating cash flows in years 1, 2, and 3?
c. What are the terminal cash flows at the end of Year 3?
d. If the Project has average risk, is it expected to be profitable?
|
What is your portfolio rate of return
: Review the performance of your stock choices in your TDAU thinkorswim portfolio and consider recent financial news, industry news, financial statements, and financial indicators (e.g., ratios) to determine your next steps. What is the current value o..
|
|
Creative thesis to address the material
: Conduct your own research and find at least three additional credible resources. An annotative bibliography includes a complete citation for each source and a short paragraph for each source stating what the source contains and its usefulness.
|
|
Show impact of these events on the domestic australian beef
: Use supply and demand curves to show the impact of these events on the domestic Australian beef market.
|
|
What is the students body mass
: In a laboratory test, a student's resting pulse rate and lung volume are measured and found to be 60.0 beats per minute and 8.35 × 10-5 m3 , respectively. What is the student's body mass?
|
|
What are the terminal cash flows at the end of year three
: You have been asked by the president and CEO of your firm to evaluate the proposed acquisition of a new labeling machine for the firm’s pharmacy production lines. The machine’s price is $50,000, and it would cost another $10,000 for transportation an..
|
|
Could the equilibrium price have risen
: Could the equilibrium price have risen?
|
|
Determine the locomotion transport number of the vehicle
: The vehicle would be capable of traveling at 64.0 km/h while the operator supplies power equal to that of a person running at 5.00 m/s. Determine the locomotion transport number of this vehicle.
|
|
Does paul get arrested
: The officer then consults the state patrolman's guide to locomotion transport numbers for the correct value. Does Paul get arrested?
|
|
What is each project IRR
: What is each project’s IRR? If each project’s cost of capital were 10%, which project, if either, should be selected? If the cost of capital were 17%, what would be the proper choice?
|