Fi515 Course Project

FI 515 Course Project a)The net bell of the spectrometer would allow the authorized represent of the equipment, the allowance comprises and the increase in plant capital due to having the equipment. Therefore, the net cost would be the $70,000 rise costs, plus the $15,000 in modification costs and the $4,000 in capital, which rivals $89,000. b)To appointment the operating cash flows for the three social classs, we pee-pee to mold the cost savings after imposees and add the measure of depreciation. To remark the cost savings, we befuddle to take the $25,000 that is expected to be deliver and cut back it based on a tax income of 40%, or $25,000(1-.4), which constitutes $15,000. The tax on depreciation requires several(prenominal) steps to calculate. We sacrifice 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 grade of .33, .45 and .15 for familys 1, 2 and 3 respectively to find the depreciation expense. We bum then apply the 40% tax rate to those expenses. For twelvemonth 1, the depreciation expense would equal $85,000 * .33, or $28,050. The tax on the category 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. subsequently adding $15,300 to the $15,000 in savings, the cash flow fo r year 2 would equal $30,300. For year 3,! the depreciation 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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