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Mountain Company is planning to add robotics to the manufacturing facility. The cost of the...

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Accounting

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Mountain Company is planning to add robotics to the manufacturing facility. The cost of the robots is expected to be 54,900,000. The equipment falls into the 7 year IRS depreciation range (use straight line full year every year) and is expected to provide annual cash cost savings totaling $1,0000,000 over each of the next 6 years at which time the used equipment is expected to be sold for $650,000. AT the end of year 3 a required software update costing $60,000 will be made. The upgrade cost is fully tax deductible at the end of year 3 . The firm is in the 35% tax bracket. Management has decided to use a 14% hurdle rate, as a first pass, to examine the financial viability of the project. (a) Prepare a well organized schedule that concludes with the calculation of the expected NPV from this project. (b) Is the project's IRR more or less than 14% ? How do you know? (c) Give or take a 2 point range (for example 6%8% ) where is the project's IRR

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