hed-fabelcld4 Principles of Business Finance Homework: Chapter 12 Homework Score
ID: 2792565 • Letter: H
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hed-fabelcld4 Principles of Business Finance Homework: Chapter 12 Homework Score: 025 of 1 pt SP 12-18 (similar to) 8 of 11 (11 complete) HW Score: 81 82% 90f 11 pts Question Hep * Calculating project cash flows and NPV) Wer's Trucking Inc is considering the purchase of a new production machine for $105.000 The purchase of this new machine will result in an Increase in earmings before interest and taxes of $21,000 per year To operate this machine properly workers would have to go theough a brief training session that would cost $4 250 aher tax In addtion, it would cost 36,000 after tax to install this machine corecty Also because this machine is extremely eficient, its purchase would necesstale an increase in inventory of $28,000 This rhachine has an exspolcted ie of 10 years, ather have no sahage value Finally, to purchase the new machine t appears thut the em would have to bonow $50,000 a 10 percent interest trom its local bank resulting n adstional terest pay ments ef S5 0 0 per year Assurne si piled stra tex d p eciaton that this nadine s be ng depreciated down tom·33 percent mai al ta ras and a requred rate of retum of 7 percent a. What is the iniial ouday associated with this project? b. What are the annual aher tax cash fows assoclated with this peoject for years 1 through 9 C. What is the terminal cash fow in year 10 (that s. Bie arnual aber lax cash fow in year 10 plus any addtional cash fows associated with termination of the projet d. Should this machine be purchased? a. The initial cash outlay associated with this project is $ 143.250 (Round to the mearest dolla b. The anual atr tax cash ows associated withthis project for years 1 through 9 are Round to the nearest doa) Enter your answer in the as box and then cick check Answer 2 p2017 PeenExplanation / Answer
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