New Project Analysis Of Spectrometer ($70000)

Acquisition of new Spectrometer Problem 11-7 (A Relevant train: Equipment Base Price : adaption for call Cost: serviceable Capital for Use: $70,000.00 $15,000.00 $4,000.00 $89,000.00 course 0 Net remove execute : ($89,000.00) negative since this is the woo of the equipment and all associated costs to consume into operation (B disparagement Base Cost of Asset : Modification/Use Cost: wear and tear Base $ 70,000.00 $15,000.00 $ 85,000.00 workings groovy for role not included since asset valuation is based upon cost of asset and costs related to make for asse Operating cash full points Revenue -Expenses EBDT - derogation EBT - evaluatees (40% Rate) After assess operating profit + depreciation Cash Flow grade 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 Depreciation (see above in N16, N17, N18) twelvemonth 1 Post Tax Sa vings: $ 15,000.00 social class 2 $ 15,000.00 Cash shielded by dint of depreciation Cash Flow $ 11,220.00 $ 26,220.00 $ 15,300.00 $ 30,300.00 (C Additional (non-operating) cash flow in year 3 Salvage appreciate : Book Value of Asset in family 4 Tax on salvage nourish : Increase in NWC : Total exempt 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 Wh en work out NPV in Excel : ($6,703.83) Valu! e 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 want to get a full essay, set out it on our website: OrderEssay.net

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