Intro You're evaluating a new electron microscope for the QA(quality assurance) unit. The microscope will cost $24,000 to buyand another $2,000 to install, and will be sold for $1,800 after 3years. It falls into the 3-year MACRS class, with depreciationrates as follows: Year 1 2 3 4 Depreciation rate 33% 45% 15% 7% Themicroscope will require an inventory of spare parts worth $5,000.The equipment will not increase revenue, but will save the company$12,000 in labor costs each year. Your company's marginal tax rate(federal plus state) is 34% and the appropriate cost of capital forthis project is 13%
Attempt 1/5 for 10 pts. Part 1 What is the initial (year-0) freecash flow from the project? Choose the right sign.
Attempt 1/5 for 10 pts. Part 2 What is the free cash flow inyear 1?
Attempt 1/5 for 10 pts. Part 3 What is the free cash flow inyear 2?
Attempt 1/5 for 10 pts.Part 4 What is the after-tax salvagevalue at the end of year 3?
Attempt 1/5 for 10 pts. Part 5 What is the free cash flow inyear 3?
Attempt 1/5 for 10 pts. Part 6 What is the NPV of thisproject?
