Co is considering to buy a new piece of equipment for $220000. It has an eight-

Co
is considering to buy a new piece of equipment for $220000. It has an
eight-year midpoint of its asset depreciation range (ADR). It will
require and additional initial investment of $120000 in non depreciable
working capital. $30000 of this investment will be recovered after the
sixth year and will provide additional cash flow for that year. Income
before depreciation and taxes for the next six years will be: Year Amount 1 $170000 2 150000 3 120000 4 105000 5 90000 6 80000 The
tax rate is 30%. The cost of capital must be computed based on the
following (round the final value to the nearest whole number): Cost (after tax) Weights Debt Kd 6.5% 30% Preferred stock Kp 10.2 10 Common equity (retained earnings) Ke 15.0 60 a) Determine the annual depreciation schedule b) Determine annual cash flow. Incl. recovered working capital in the sixth year c) Determine the weighted average cost of capital d) Determine the net present value should they buy new equipment