You're evaluating a new electron microscope for the QA (quality assurance) unit. The microscope will cost $21,000 to buy and another $2,000 to install, and will be sold for $1,800 after 3 years. It falls into the 3-year MACRS class, with depreciation rates as follows: Year 1 2 3 4 Depreciation rate 33% 45% 15% 7% The microscope will require an inventory of spare parts worth $5,000. The equipment will not increase revenue, but will save the company $12,000 in labor costs each year. Your company's marginal tax rate (federal plus state) is 34% and the appropriate cost of capital for this project is 13%. Part 1 7 8 Attempt 1/20 for 10 pts. What is the initial (year-0) free cash flow from the project? Choose the right sign. 0+ decima Submit Part 2 7 8 | Attempt 1/20 for 10 pts. What is the free cash flow in year 1? 0+ decima Submit Part 3 1 8 Attempt 1/20 for 10 pts. What is the free cash flow in year 2? 0+ decima Submit Part 4 7 8 Attempt 1/20 for 10 pts. What is the after-tax salvage value at the end of year 3? 0+ decima Submit Part 5 7 8 | Attempt 1/20 for 10 pts. What is the free cash flow in year 3? 0+ decima Submit Part 6 7 8 | Attempt 1/20 for 10 pts. What is the NPV of this project? 0+ decima SubmitProblem 12 Intro Consider a project with a 4-year life. The initial cost to set up the project is $100,000. This amount is to be linearly depreciated to zero over the life of the project and there is no salvage value. The required return is 11% and the tax rate is 34%. You've collected the following estimates: Base Pessimistic Optimistic case Unit sales per year (Q) 7,000 5,000 9,000 Price per unit (P) 50 40 60 Variable cost per unit 20 35 15 (VC) Fixed costs per year 30,000 50,000 20,000 (FC) Part 1 7 8 Attempt 1/20 for 10 pts. What is the annual free cash flow in the base case? 0+ decima Submit Part 2 8 Attempt 1/20 for 10 pts. What is the NPV in the base case? 0+ decima Submit Part 3 7 8 Attempt 1/20 for 10 pts. What is the NPV in the pessimistic case? 0+ decima Submit Part 4 7 8 Attempt 1/20 for 10 pts. What is the NPV in the optimistic case? 0+ decima Submit