Question: please write the answers step by step not only the final answers a. 1. The Mighty Mouse Computer company is considering whether or not to

 please write the answers step by step not only the finalanswers a. 1. The Mighty Mouse Computer company is considering whether or

please write the answers step by step not only the final answers

a. 1. The Mighty Mouse Computer company is considering whether or not to install a packaging robot. The robot initial cost $460,000, shipping cost $30,000 and installation $10,000. The robot can be depreciated using MACRS as a 5-year asset. (MACRS depreciation rates for a five-year asset: 20%, 32%, 19.2%, 11.52%, 11.52%, and 5.76%.) The robot is expected to last for five years, at which time management expects to sell it for parts for $100,000. The robot is expected to replace five employees in the shipping department, saving the company $150,000 each year. Mighty's tax rate is 30%. What are the cash flows related to the acquisition of the packaging robot? b. What are the cash flosis related to the disposition of the Font Size packaging robot? What are the net cash flows for each year of the robot's 5 year life? d. What is the net present value of the robot investment if the cost of capital is 10%? e. What is the net present value of the robot investment if the cost of capital is 4.5%? f. What is the profitability index of this investment if the cost of capital is 5%? g. What is the payback period of the robot investment? h. What is the discounted payback period of the robot invest- ment if the cost of capital is 5%? i. What is the internal rate of return of the robot investment? j. What is the modified internal rate of return of the robot investment if the cash flows are reinvested at 5%? k. If the cost of capital is 5%, should Mighty Mouse invest in this robot? 2. The B. Bowden Company is evaluating the purchase of a stadium, the B. B. Dome. The stadium would cost Bowden $1 million and would be depreciated for tax purposes using straight-line over 20 years (that is, $50,000 per year). It is expected that the stadium will increase B. Bowden revenues by $400,000 per year, but would also increase expenses by $200,000 per year. B. Bowden would be expected to increase its working capital by $20,000 to accommodate the increased investment in ticket accounts receivable. B. Bowden Company intends to sell the stadium to the city after ten years for $600,000. The marginal tax rate for B. Bowden is 35%. For purposes of identifying the timing of cash flows, consider the purchase to be made at the end of 2010, the first year of operations the year 2011, and the last year of operations the year 2020. a. What are the cash flows related to the acquisition of the stadium? b. What are the cash flows related to the disposition of the stadium? c. Calculate the net cash flows for each year, 2010 through 2020. d. If the cost of capital for this project is 10%, should Bowden invest in the new stadium? e. Draw an investment profile of the project. Over what range of cost of capital would this project be attractive? Over what range of cost of capital would this project be unattractive

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