Problem 12-8 New project analysis You must evaluate a proposed spectrometer for
ID: 2697828 • Letter: P
Question
Problem 12-8
New project analysis
You must evaluate a proposed spectrometer for the R&D department. The base price is $170,000, and it would cost another $34,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $76,500. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an $13,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $66,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%.
Explanation / Answer
http://answers.yahoo.com/question/index?qid=20110816172235AA0Azew
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