Mills Mining is considering an expansion project. To date they have spent $75,00
ID: 2707906 • Letter: M
Question
Mills Mining is considering an expansion project. To date they have spent $75,000 investigating the viability of the project and have decided to proceed. The proposed project will cost $500,000 in addition to the $75,000 that was spent on the feasibility study. The project will be depreciated over a 3 year MACRS class life. Please show work.
MACRS
Depreciation
Year Rates
1 0.33
2 0.45
3 0.15
4 0.07
If the project is undertaken the company will need to increase its inventories by $50,000, and its accounts payable will rise by $10,000. The company will realize an additional $600,000 in sales over each of the next four years. The company
Explanation / Answer
a) What is the project