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ch.12 question 9 You...

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Finance

ch.12 question 9
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You must evaluate the purchase of a proposed spectrometer for your company that will save the company $95,000 per year in before-tax labor costs. The base price is $200,000 but it would cost another $60,000 to make required modifications. Ass, $15,000 would need to be spent to add additional net working capital. The equipment would be depreciated using MACRS orer a threeyear life. The 3 -year MACRS rates are 33%,45%,15%, and 7%, respectively. In three years, it will be sold for an estimated $70,000. The firm's marginal tax rate is 22% and its WACC is 10%. What is the initial outlay for the spectrometer? 5200,000 5215,000 5260,000 5275,000 $255,000

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