Question: please answer all 4 (New project analysis) The Chung Chemical Corporation is considering the purchase of a Chemich aralysis machine Although the machine being considered
please answer all 4
(New project analysis) The Chung Chemical Corporation is considering the purchase of a Chemich aralysis machine Although the machine being considered will result in an increase in earnings before interest and taxes of $38,000 per year, it has a purchase price of $200,000, and it would cost an additional 58,000 fo properfy install the machine In addition, to properly operate the machine, inventory must down to zero, a 32 percent marginal tax rate, and a required rate of rear, after which it will have no salvage value Also, assume simplified straight-line depreciation and that this machine is being depreciated a. What is the initial outliay associated with this project? b. What are the annual after-tax cash flows associated with this project for years 1 through 9 ? c. What is the terminal cash flow in year 10 (What is the annual anter-tax cash flow in year 10 plus any additional cash flows associated with the termination of the project)? d. Should this machine be purchased? a. What is the initial cutlay associated with this project? (Round to the nearest dollar)
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