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Category > Accounting Posted 05 May 2017 My Price 15.00

Mars Inc. is considering the purchase of a new machine

Mars Inc. is considering the purchase of a new machine that costs $80,000. This machine will reduce manufacturing costs by $20,000 annually. Mars will use the 3-year MACRS method (shown below) to depreciate the machine, and it expects to sell the machine at the end of its 5-year life for $10,000 salvage value. The firm expects to be able to reduce net operating working capital by $8,000 when the machine is installed, but the net working capital will return to the original level when the project is over (i.e., after 5 years). Mars's marginal tax rate is 40 percent, and it uses a 12 percent cost of capital to evaluate projects of this nature. Calculate the net cash flows of the project. Cash outflows should be negative numbers, and round it to a whole number, e.g., -23,500.

Year MACRS %
1 0.33
2 0.45
3 0.15
4 0.07
5 0.11
6 0.06
CF0  
CF1  
CF2  
CF3  
CF4  
CF5  

Answers

Alpha Geek
(8)
Status NEW Posted 05 May 2017 11:05 AM My Price 15.00

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Attachments

file 1493985197-1333744_1_636295056623205797_1333744.xlsx preview (156 words )
Ye-----------arP-----------roj-----------ect----------- an-----------aly-----------sis----------- wo-----------rks-----------hee-----------t:T-----------ax -----------rat-----------e (-----------t)C-----------ost----------- of----------- ca-----------pit-----------al -----------(Ke-----------)Pr-----------ofi-----------t o-----------n s-----------ale----------- of----------- Ne-----------w m-----------ach-----------ine----------- [D-----------] =----------- [C-----------] ------------ [B-----------]Ta-----------x o-----------n p-----------rof-----------it -----------on -----------sal-----------e o-----------f N-----------ew -----------mac-----------hin-----------e [-----------E] -----------=[D-----------] *-----------(t)-----------Aft-----------er------------tax----------- pr-----------oce-----------eds----------- fr-----------om -----------sal-----------e o-----------f m-----------ach-----------ine----------- [F-----------] =----------- [D-----------] ------------ [E-----------]MA-----------CRS----------- % -----------(De-----------p)N-----------ew -----------ass-----------et -----------Dep-----------rec-----------iat-----------ion----------- [A-----------]*(-----------Dep-----------)Ma-----------chi-----------ne -----------cos-----------t [-----------G] -----------= [-----------A]W-----------ork-----------ing----------- ca-----------pit-----------al -----------[H]----------- = -----------Giv-----------enT-----------ota-----------l n-----------et -----------inv-----------est-----------men-----------t [-----------X] -----------= [-----------G] -----------+ [-----------H]N-----------ew -----------mac-----------hin-----------e c-----------ost----------- [A-----------] =----------- Gi-----------ven-----------New----------- ma-----------chi-----------ne -----------mar-----------ket----------- va-----------lue----------- [C-----------] =----------- Gi-----------ven-----------Ter-----------min-----------al -----------cas-----------h f-----------low-----------s [-----------Z]
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