Week 3 Project
Your beginning aeon at the Cosmo K Manufacturing Group continues. Your supervisor, Gerry, assigns you a activity anniversary anniversary to assay your adequacy in finance.
The aggregation is because the accession of a new appointment apparatus that will accomplish abounding of the tasks now performed manually. For this week's task, Gerry has accustomed you the albatross of evaluating the banknote flows associated with the new machine. He has requested the address to be delivered aural the week.
Evaluation of a New Appointment Machine
The Cosmo K Manufacturing Group currently has sales of $1,400,000 per year. It is because the accession of a new appointment machine, which will not aftereffect in any new sales but will save the aggregation $105,500 afore taxes per year over its 5-year advantageous life. The apparatus will amount $300,000 additional addition $12,000 for installation. The new asset will be attenuated application a adapted accelerated amount accretion arrangement (MACRS) 5-year chic life. It will be awash for $25,000 at the end of 5 years. Additional account of $11,000 will be appropriate for genitalia and aliment of the new machine. The aggregation evaluates all projects at this accident akin application an 11.99% appropriate amount of return. The tax amount is accepted to be 35% for the abutting decade.
Answer the afterward questions:
What is the absolute advance in the new apparatus at time = 0 (T = 0)?
What are the net banknote flows in anniversary of the 5 years of operation?
What are the terminal banknote flows from the auction of the asset at the end of 5 years?
What is the NPV of the investment?
What is the IRR of the investment?
What is the aftereffect aeon for the investment?
What is the advantage basis for the investment?
According to the accommodation rules for the NPV and those for the IRR, is the activity acceptable?
Is there a battle amid the two accommodation methods? If so, what would you use to accomplish a recommendation?
What are the pros and cons of the NPV and the IRR? Explain your answers.
Show the abstracts acclimated and the calculations for anniversary catechism in a Microsoft Excel area and the assay in a Microsoft Word document.
Name your Microsoft Excel area MBA6010_W3_ LastName_FirstName.xls and your Microsoft Word certificate MBA6010_W3_LastName_FirstName.doc.
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