b. Determine the annual cash flow for each year. Be sure to include the recovered working capital in Year 6. (Do not roundintermediate calculations and round your answers to 2 decimal places.)Year123456Cash Flowc. Determine the weighted average cost of capital. (Do not round intermediate calculations. Enter your answer as a percentrounded to 2 decimal places.)Weighted average cost of capital%d-1. Determine the net present value. (Use the WACC from part c rounded to 2 decimal places as a percent as the cost of capital(e.g., 12.34%). Do not round any other intermediate calculations. Round your answer to 2 decimal places.)Net present value DataPoint Engineering is considering the purchase of a new piece of equipment for $310,000. It has an eight-year midpoint of its assetdepreciation range (ADR). It will require an additional initial investment of $130,000 in nondepreciable working capital. $52,000 of thisinvestment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation andtaxes for the next six are shown in the following table. Use Table 12–11, Table 12-12. Use Appendix B for an approximate answer butcalculate your final answer using the formula and financial calculator methods.Year Amount$206,000174,000144,000129,000102,00092,000123456The tax rate is 25 percent. The cost of capital must be computed based on the following:DebtPreferred stockCommon equity (retained earnings)Year123456KdKpKeDepreciationBasea. Determine the annual depreciation schedule. (Do not round intermediate calculations. Round your depreciation base and annualdepreciation answers to the nearest whole dollar. Round your percentage depreciation answers to 3 decimal places.)Cost(aftertax)8.30%PercentageAnnualDepreciation Depreciation12.4017.00Weights40%1050

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ntermediate calculations and round your answers to 2 decimal places.) Year 1 2 3 4 5 6 Cash Flow . Determine the weighted average cost of capital. (Do not round intermediate ounded to 2 decimal places.) Weighted average cost of capital %

ntermediate calculations and round your answers to 2 decimal places.) Year 1 2 3 4 5 6 Cash Flow . Determine the weighted average cost of capital. (Do not round intermediate ounded to 2 decimal places.) Weighted average cost of capital %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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