As a financial analyst, you must evaluate a proposed project to produce printer cartridges. The purchase price of the equipment, including installation, is $65,000, and the equipment will be fully depreciated att = 0. Annual sales would be 4,000 units at a price of $50 per cartridge, and the project's life would be 3 years. Current assets would increase by $5,000 and payables by $3,000. At the end of 3 years, the equipment could be sold for $10,000. Variable costs would be 70% of sales revenues, fixed costs would be $30,000 per year, the marginal tax rate is 25%, and the corporate WACC is 11%. The CFO asks you to do a scenario analysis using these inputs: Scenario Probability Unit Sales VC% Best case 25% 4,800 65% Base case 50 4,000 70 Worst case 25 3,200 75 Other variables are unchanged. What are the expected NPV, its standard deviation, and the coefficient of variation? (Hint: To do the scenario analysis, you must change unit sales and VC% to the values specified for each scenario, get the scenario cash flows, and then find each scenario's NPV. Then you must calculate the project's expected NPV, standard deviation (o), and coefficient of variation (CV). • NPV Best Case Scenario = $ NPV Base Case Scenario = $ • NPV Worst-case Scenario = -

over the next four years. The client is also considering purchasing a different CNC systeme Teplace its currently leased system (rather than renewing /entering a new lease contract). The new system will cost $450,000 to purchase and install (and for training of employees in use). salvage value of $30,000. The interest rate is projected to be 6% per year during the life o1 the project. a. Draw a cash flow diagram for the next four vears for the existing system (leased system) and a separate cash flow diagram for the system that is being considered for purchase. b. For each option (leasing and buying), calculate the value of all cash receipts and disbursements at the end of the third year. C. Compare the value of each option at the end of the third vear. What should the client do?

You must evaluate the purchase of a proposed spectrometer for the R&D department. The purchase price of the spectrometer including modifications is $300,000, and the equipment will be fully depreciated at the time of purchase. The equipment would be sold after 3 years for $132,000. The equipment would require a $10,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $54,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 25%. a. What is the initial investment outlay for the spectrometer after bonus depreciation is considered, that is, what is the Year 0 project cash flow? Enter your answer as a positive value. Round your answer to the nearest dollar. $ b. What are the project's annual cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar. Year 1: $ Year 2: $ Year 3: $ c. If the WACC is 12%, should…

You must evaluate the purchase of a proposed spectrometer for the R&D department. The purchase price of the spectrometer including modifications is $300,000, and the equipment will be fully depreciated at the time of purchase. The equipment would be sold after 3 years for $90,000. The equipment would require an $8,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $71,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 25%. a. What is the initial investment outlay for the spectrometer after bonus depreciation is considered, that is, what is the Year 0 project cash flow? Enter your answer as a positive value. Round your answer to the nearest dollar. $ b. What are the project's annual cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar. Year 1: $ Year 2: $ Year 3: $ 53,250 53,250 c. If the WACC…