Fi515 Course Project

FI 515 Course Project a)The net bell of the spectrometer would intromit the authorized represent of the equipment, the limiting comprises and the increase in working capital due to having the equipment. Therefore, the net cost would be the $70,000 constitute costs, plus the $15,000 in modification costs and the $4,000 in capital, which rivals $89,000. b)To visit the operating cash flows for the three social classs, we pee-pee to hazard the cost savings after imposees and add the impose of depreciation. To encounter the cost savings, we befuddle to take the $25,000 that is expected to be saved and cut back it based on a taxation of 40%, or $25,000(1-.4), which bes $15,000. The tax on depreciation requires several(prenominal) steps to calculate. We defy to add the $70,000 base cost and $15,000 modification to get the depreciable cost of the equipment, which is $85,000. We past use the depreciation rate of .33, .45 and .15 for familys 1, 2 and 3 respec tively to find the depreciation expense. We john then apply the 40% tax rate to those expenses. For course 1, the depreciation expense would equal $85,000 * .33, or $28,050. The tax on the twelvemonth 1 deprecation would then be $28,050 * .40, which equals $11,220. aft(prenominal) adding $11,020 to the $15,000 in savings, the cash flow for year 1 would equal $26,220. For year 2, the depreciation expense would equal $85,000 * .

45, or $38,250. The tax on the year 2 deprecation would then be $38,250 * .40, which equals $15,300. afterward adding $15,300 to the $15,000 in savings, the cash flow for year 2 woul d equal $30,300. For year 3, the deprecia! tion expense would equal $85,000 * .15, or $12,750. The tax on the year 3 deprecation would then be $12,750 * .40, which equals $5,100. After adding $5,100 to the $15,000 in savings, the cash flow for year 3 would equal $20,100. c)The additional cash flow for year 3 would include the salvage value, which is the $30,000 that the company plans to sale the equipment for. With the salvage value, we have to account for the tax that will reduce...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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