PROBLEM 3 DCF , accrual accounting rate of return, working capital, evaluationof performanceCentury Lab plans to purchase
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PROBLEM DCF accrual accounting rate of return, working capital, evaluationof performanceCentury Lab plans to purchase a new centrifuge machine for its New Hampshire facility.The machine costs $ and is expected to have a useful life of years with a terminal disposal value of $ Saving in cash operating costs are expected to be $ per year. However, additional working capital is needed to keep the machine running efficiently. The working capital must continually be replaced, so an investment of $ needs to be maintained at all times, but this investment is fully recoverable will be cashin at the end of the useful life. Century Lab's required rate of return is Ignore income tax in your analysis. Assume all cash flows occurs at yearendexcept for initial investment amounts at the beginning of the year. Century lab usesstraight line depreciation for its machine.
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0136126638
13th Edition
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav
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