7. Problem 12.08 (New Project Analysis) eBook You must evaluate the purchase of a proposed spectrometer for the R&D depa

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7 Problem 12 08 New Project Analysis Ebook You Must Evaluate The Purchase Of A Proposed Spectrometer For The R D Depa 1 (36.51 KiB) Viewed 88 times

7. Problem 12.08 (New Project Analysis) eBook You must evaluate the purchase of a proposed spectrometer for the R&D department. The purchase price of the spectrometer including modifications is $190,000, and the equipment will be fully depreciated at the time of purchase. The equipment would be sold after years for $94,000. The equipment would require a $12,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $67,000 per year in before tax labor costs. The firm's marginal federal-plus-state tax rate is 25% a. What is the initial investment outlay for the spectrometer after bonus depreciation is considered that is what is the Year O project cash flow? Enter your answer as a positive value. Round your answer to the nearest dollar $ b. What are the project's annual cash flows in Years 1, 2, and 37 Do not round Intermediate calculations. Round your answers to the nearest dollar, Year is Year 2:5 Year 3:5 c. If the WACC is 14%, should the spectrometer be purchased? -Select-