Why would you perform a rolling NPV calculation?

Much earlier this semester, I said the three things listed below, explain, in detail, why each one of these is correct and$/$or true.

Cash Flow is king

Keep your tax base low

Depreciation is your friend

Why does a loan pay off faster if you make extra payments? Show this with an example calculation.

What is the weighted average cost of capital for a firm which has a debt$-$to$-$equity ratio of $2$:$3$ and a beta of $2\mathrm{.}3.$ The risk free rate is $4\mathrm{.}5\%$ and the market risk premium is $8\mathrm{.}5\%$; the corporate tax rate is your age in years $($i$.$e$.$ my tax rate is $61\%).$

MTEC $4140$ Engineering Economics Name $q,$ Final Exam $-$ Summer Semester $2024$

$5.$ Using the value calculated in Problem $4,$ determine if the following is a good idea:

Your company has an existing manufacturing program for a stable product line $($reference and complete the Excel file called MTEC $4140$ Exam $2-$Su$24$ Problem $5).$ The process is relatively stable but you think there is room for improvement. Based on what you have learned from the gifted faculty at UMASS Lowell, you boldly state that, for $$1,200,000$ in capital equipment plus another $$300,000$ for $R$&$D,$ you could improve $2$ process steps $15\%$ each $($you choose which ones$)$ and that the cost savings would recover the capital equipment expense in less than $12$ months. Is this possible?

The expected monthly volumes are:

$\backslash$table$[[$Month $1,10,000],[$Month $2,10,000],[$Month $3,10,000],[$Month $4,11,000],[$Month $5,11,000],[$Month $6,11,000],[$Month $7,9,000],[$Month $8,9,000],[$Month $9,9,000],[$Month $10,10,000],[$Month $11,10,000],[$Month $12,10,000],[$TOTAL$,120,000]]$

You will finance everything except R&D$,$ which has is own internal funding. Your company's policy for profit is $45\%$ on sell price. What are you going to recommend? Depending on your results, are there any other altematives for you to consider?

Provide a comprehensive solution to prove or disprove your assertion. I expect to see calculations.....meaning ones relevant to what you have been learning lately. Answers without showing how you got them will not be counted.

Here's some more information and advice which you may find useful:

Financing is $9\mathrm{.}0\%$ annual rate; you will be financing over $12$ months for simplicity $($yeah$,$ I know this sounds loan$-$sharkish but just go with it$)$

Manufacturing equipment, such as what you are recommending, typically has a useful life of $5$ years

$E=m{c}^2$

Your company policy for equipment it to depreciate to zero

Be thorough and make sure that you have considered all factors and have listed and supported all decisions and assumptions used in your calculations

From there to here, from here to there, funny things are everywhere $($Dr$.$ Seuss$)$