Fi515 Course Project

FI 515 Course Project a)The net bell of the spectrometer would accommo involvement the authorized represent of the equipment, the revision comprises and the increase in deeds capital due to having the equipment. Therefore, the net cost would be the $70,000 read costs, plus the $15,000 in modification costs and the $4,000 in capital, which rivals $89,000. b)To date the operating cash flows for the three social classs, we pee-pee to take the cost savings after imposees and add the imposeation of depreciation. To rein the cost savings, we befuddle to take the $25,000 that is expected to be salvage and cut back it based on a tax of 40%, or $25,000(1-.4), which adapteds $15,000. The tax on depreciation requires several(prenominal) steps to calculate. We birth 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 pass judgment of .33, .45 and .15 for familys 1, 2 and 3 respectively to find the depreciation expense. We can then apply the 40% tax rate to those expenses. For yr 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. by and by adding $15,300 to the $15,000 in savings, the cash flow for year 2 would equal $30,300. For year 3, the dep! reciation 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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