CH 19 HW - Correct Response Heaps Company Schedule of Expected Cash Flow-630000 Year 0 Year 1-31500 Operating costs 218700 Savings 18000 Depreciation

CH 19 HW - Correct Response Heaps Company Schedule of...

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Correct Response Heaps Company Schedule of Expected Cash Flow Year 0 -630000 Year 1: Operating costs -31500 Savings 218700 Depreciation shield 18000
Total 205200 Years 2–7: Operating costs -31500 Savings 218700 Depreciation shield 36000 Total 223200 Year 8: Operating costs -31500
Correct Response 2. What is the payback period? Round your answer to one decimal place. 3. Calculate the NPV of the closed-loop system. Round intermediate calculations and the final answer to the nearest dollar. $ Should the company invest in the system?4. The calculation in Requirement 3 ignored several factors that could affect the project’s viability: savings from avoiding the annual fines, positive effect on sales due to favorable environmental publicity, increased plating quality from the new system, and the avoidance of the lawsuit. Can these factors be quantified?If so, should they have been included in the analysis?Suppose, for example, that the annual fines being incurred are $75,000, the sales effect is $60,000 per year, the quality effect is not estimable, and cancellation of the lawsuit because of the new system would avoid an expected settlement at the end of Year 3 (including legal fees) of $300,000. Assuming these are all after-tax amounts, what effect would their inclusion have on the payback period? On the NPV? Round payback to two decimal places

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