Question: I need to answer the following please Ch 11: Post-Assessment - Cash Flow Estimation and Risk Analysis eBook 117:58 Jem Walk-Through New-Project Analysis The president

 I need to answer the following please Ch 11: Post-Assessment -

I need to answer the following please

Cash Flow Estimation and Risk Analysis eBook 117:58 Jem Walk-Through New-Project Analysis

Ch 11: Post-Assessment - Cash Flow Estimation and Risk Analysis eBook 117:58 Jem Walk-Through New-Project Analysis The president of your company, MorChuck Enterprises, has asked you to evaluate the proposed acquisition of a new chromatography for the firm's R&D department. The equipment's basic price is $75,000, and it would cost another $14,500 to modify it for special use by your firm. The chromatography which falls into the MACRS 3-year class, would be sold after 3 years for $28,400. The MACRS rates for the first three years are 0.3333, 0.4445 and 0.1481. (Ignore the half-year convention for the straight-line method.) Use of the equipment would require an increase in net working capital (spare parts inventory) of $4,300. The machine would have no effect on revenues, but it is expected to save the firm $26,050 per year in before-tax operating costs, mainly labor. The firm's marginal federal-plus-state tax rate is 25%. Cash outflows and negative NPV value, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar. a. What is the Year-0 net cash flow? $ b. What are the net operating cash flows in Years 1, 2, and 3? (Note: Do not include recovery of NWC or salvage value in Year 3's calculation here.) Year 1: Year 2: Year 3: $ c. What is the additional (nonoperating) cash flow in Year 3? d. If the project's cost of capital is 14%, what is the NPV of the project? $ Should the chromatographybe purchased? -Select- #

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