Transcribed Image Text
9. Suppose Blue Thumb Tools is considering the introduction of anew, heavier hammer to be used for driving spikes. The new hammerwill cost $490,000. The cost will be depreciated straight-line tozero over the project’s five-year life, at the end of which the newhammer can be scrapped for $40,000. The new hammer will save thefirm $146,000 per year in pretax operating costs, and it requiredan initial investment in net working capital of $35,000. The taxrate of the firm is 30%.What are the cash flows of firm’s new project (using a timeline)?What is the net present value of this project (list yoursetups)?What is the IRR of this project (list your setups)?Please solve without excel so that I can see the steps.
Other questions asked by students
Medical Sciences
Mechanical Engineering
Physics
Accounting
Accounting