rou must evaluate the purchase of a proposed spectrometer for the ROD department. The purchase...
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rou must evaluate the purchase of a proposed spectrometer for the ROD department. The purchase price of the spectrometer including modifications is 5190,000 , and the equipment will be fuly depreclated at the time of purchase. The equipment would be sold after 3 years for $37,000. The equipment would require a $7,000 increase in net operating working copital (spare parts inventory). The project would have no effect on revenues, but it thould save the firm 531,000 per year in before-tax labor costs. The firm's marginal federalplus-state tax rate is 25% a. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash fow? chter your answer as a poaleve value. Round your ansber to the nearest dollar. 5 b. What are the prolect's annual cash flows in Years 1, 2, and 37. Do not round intermediate calcilations. Round your answers to the nearest dollar. Vear its vear 2:3 year 3:5 C. If the WACC is 10%, should the spectrometer be purchased
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