Explore BrainMass

Explore BrainMass

    Net cash flows, NPV, IRR, MIRR, Payback and Discounted Payback

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    You are evaluating a proposal to buy a new machine. The base price is $108,000, and shipping and installation costs would add another $12,500. The machine is depreciated using straight line method, and it would be sold after 3 years for $60,000. The machine would require a $5,500 increase in net operating working capital. There would be no effect on revenues, but pre-tax labour costs would decline by $44,000 per year. The marginal tax rate is 35%, and the WACC is 12%.
    What are the project's annual cash flows during years 0, 1, 2 and 3

    © BrainMass Inc. brainmass.com March 5, 2021, 1:53 am ad1c9bdddf

    Solution Preview

    The solution is provided in excel format showing step by step ...

    Solution Summary

    The file shows step by step evaluation of the project under different capital budgeting techniques.