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Your manager comes to you and asks you to do the capital budgeting analysis for the following new machine. The required initial investment for the machine is $15M. The machine is in operation for 5 years, it produces sales of $25M per year with $12M operating expenses per year. You will sell the machine in the fifth year for $8M. The machine has a useful life of 5 years and is linearly depreciated. You have to make an initial investment in net working capital of $1M. The tax rate is 21%. Do the capital budgeting for the new machine and answer the questions on the right. Assume a discount rate of 10% per year.

a. What is the cashflow from investments today in year 0? Enter your answer rounded to the nearest whole million dollar and include a negative sign if necessary

b. What is the cashflow from investments in year 5? Enter your answer in millions of dollars rounded to 2 decimal places

c. What is the cashflow from operations in the 1st year? Enter your answer rounded to the nearest whole million dollar

d. What is the cashflow from changes in net working capital today in year 0? Enter your answer rounded to the nearest whole million dollar

e. What is the cashflow from changes in net working capital in year 5? Enter your answer rounded to the nearest whole million dollar.

f. What is the NPV of the new machine? Enter your answer in millions of dollars rounded to 2 decimal places

g. Should you invest in the new machine?

- Yes, you should

- You are indifferent between investing in the machine or not

- No, you should not

Mathias 1 1 point 2 What is the cashflow from investments today in year 07 Enter your answer rounded to the nearest whole million dollar and include a negative sign if necessary lex $126,342423.62 - 126) Capital Budgeting for a New Machine Your manager comes to you and asks you to do the capital budgeting analysis for the following new machine. The required initial investment for the machine is $15M. The machine is in operation for 5 years, it produces sales of $25M per year with $12M operating expenses per year. You will sell the machine in the fifth year for $8M. The machine has a useful life of 5 years and is linearly depreciated. You have to make an initial investment in net working capital of $1M. The tax rate is 21%. Do the capital budgeting for the new machine and answer the questions on the right. Assume a discount rate of 10% per year. Type your answer.. 2 2 1 point What is the cashflow from investments in year 5? Enter your answer in millions of dollars rounded to 2 decimal places lex $26,234,612 2323421 -26.23) Type your answer 3 point What is the cash flow from operations in the 1st year? Enter your answer rounded to the nearest whole million dollar lex $6242342362) Type your answer. point What is the cashflow from changes in networking capital today in year ? Enter your answer rounded to the nearest whole million dollar lex $62423,423-62) Type your awer What is the cashflow from changes in networking capital in year 5 Enter your answer rounded to the nearest whole million dollar Type your answer Lot What is the NPV of the machine Enter your answer in millions of dollars Mathias 1 1 point 2 What is the cashflow from investments today in year 07 Enter your answer rounded to the nearest whole million dollar and include a negative sign if necessary lex $126,342423.62 - 126) Capital Budgeting for a New Machine Your manager comes to you and asks you to do the capital budgeting analysis for the following new machine. The required initial investment for the machine is $15M. The machine is in operation for 5 years, it produces sales of $25M per year with $12M operating expenses per year. You will sell the machine in the fifth year for $8M. The machine has a useful life of 5 years and is linearly depreciated. You have to make an initial investment in net working capital of $1M. The tax rate is 21%. Do the capital budgeting for the new machine and answer the questions on the right. Assume a discount rate of 10% per year. Type your answer.. 2 2 1 point What is the cashflow from investments in year 5? Enter your answer in millions of dollars rounded to 2 decimal places lex $26,234,612 2323421 -26.23) Type your answer 3 point What is the cash flow from operations in the 1st year? Enter your answer rounded to the nearest whole million dollar lex $6242342362) Type your answer. point What is the cashflow from changes in networking capital today in year ? Enter your answer rounded to the nearest whole million dollar lex $62423,423-62) Type your awer What is the cashflow from changes in networking capital in year 5 Enter your answer rounded to the nearest whole million dollar Type your answer Lot What is the NPV of the machine Enter your answer in millions of dollars

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