You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price...

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You must evaluate the purchase of a proposed spectrometer forthe R&D department. The base price is $60,000, and it wouldcost another $12,000 to modify the equipment for special use by thefirm. The equipment falls into the MACRS 3-year class and would besold after 3 years for $30,000. The applicable depreciation ratesare 33%, 45%, 15%, and 7%. The equipment would require an $13,000increase in net operating working capital (spare parts inventory).The project would have no effect on revenues, but it should savethe firm $24,000 per year in before-tax labor costs. The firm'smarginal federal-plus-state tax rate is 40%. The data has beencollected in the Microsoft Excel Online file below. Open thespreadsheet and perform the required analysis to answer thequestions below.
What is the initial investment outlay for the spectrometer, thatis, what is the Year 0 project cash flow? Round your answer to thenearest cent. Negative amount should be indicated by a minussign.
$
What are the project's annual cash flows in Years 1, 2, and 3?Round your answers to the nearest cent.
In Year 1 $
In Year 2 $
In Year 3 $
If the WACC is 14%, should the spectrometer be purchased?

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The NPV of the project See Answer

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You must evaluate the purchase of a proposed spectrometer forthe R&D department. The base price is $60,000, and it wouldcost another $12,000 to modify the equipment for special use by thefirm. The equipment falls into the MACRS 3-year class and would besold after 3 years for $30,000. The applicable depreciation ratesare 33%, 45%, 15%, and 7%. The equipment would require an $13,000increase in net operating working capital (spare parts inventory).The project would have no effect on revenues, but it should savethe firm $24,000 per year in before-tax labor costs. The firm'smarginal federal-plus-state tax rate is 40%. The data has beencollected in the Microsoft Excel Online file below. Open thespreadsheet and perform the required analysis to answer thequestions below.What is the initial investment outlay for the spectrometer, thatis, what is the Year 0 project cash flow? Round your answer to thenearest cent. Negative amount should be indicated by a minussign.$ What are the project's annual cash flows in Years 1, 2, and 3?Round your answers to the nearest cent.In Year 1 $ In Year 2 $ In Year 3 $ If the WACC is 14%, should the spectrometer be purchased?