Smith Industries has a proposed three-year project with $270,000 equipment cost and shipping cost of $30,000....

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Smith Industries has a proposed three-year project with $270,000 equipment cost and shipping cost of $30,000. The equipment falls under the 5-year category MACRS depreciation - - 20%, 32 % , 19%, 12%, 11%, and 6% (i.e. there will be book value at end of project in year 3). Account Receivables will increase by $19,000. Account Payables will increase by $8,000. Inventory will increase by $7,000. The estimated annual EBITDA will be $80,000 per year for each of three years. equipment is expected to be sold for $23,000 in year 3. The firm's marginal tax Smith Industries estimates that an 11 percent return is required The rate is 40%. for this project. a. Find the CAPEX at t=0 b. Find the annual depreciation for each year c. Find book value at the end of year 3 d. Find net proceeds (after-tax salvage value) in year 3 from the sale of the equipment Smith Industries has a proposed three-year project with $270,000 equipment cost and shipping cost of $30,000. The equipment falls under the 5-year category MACRS depreciation - - 20%, 32 % , 19%, 12%, 11%, and 6% (i.e. there will be book value at end of project in year 3). Account Receivables will increase by $19,000. Account Payables will increase by $8,000. Inventory will increase by $7,000. The estimated annual EBITDA will be $80,000 per year for each of three years. equipment is expected to be sold for $23,000 in year 3. The firm's marginal tax Smith Industries estimates that an 11 percent return is required The rate is 40%. for this project. a. Find the CAPEX at t=0 b. Find the annual depreciation for each year c. Find book value at the end of year 3 d. Find net proceeds (after-tax salvage value) in year 3 from the sale of the equipment

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Smith Industries Project Analysis a CAPEX at t0 The CAPEX capital expenditure is the initial ... View the full answer