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ATCF1₁1 = $ ATCF12 = $ -102581 b. Determine the PW of the after-tax cash flows. PW $T = $ c. Determine the AW of the after-tax cash flows. AW $T = $ d. Determine the FW of the after-tax cash flows. FW $T = $ e. Determine the combined IRR of the after-tax cash flows. IRRC = 16500 -160221.2738 = -28667.06298 f. Determine the combined ERR of the after-tax cash flows. ERRC = % % g. Determine the real IRR of the after-tax cash flows. IRR % h. Determine the real ERR of the after-tax cash flows. ERR= do %

ATCF1₁1 = $ ATCF12 = $ -102581 b. Determine the PW of the after-tax cash flows. PW $T = $ c. Determine the AW of the after-tax cash flows. AW $T = $ d. Determine the FW of the after-tax cash flows. FW $T = $ e. Determine the combined IRR of the after-tax cash flows. IRRC = 16500 -160221.2738 = -28667.06298 f. Determine the combined ERR of the after-tax cash flows. ERRC = % % g. Determine the real IRR of the after-tax cash flows. IRR % h. Determine the real ERR of the after-tax cash flows. ERR= do %

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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ATCF11 = $ ATCF 12 = $ -102581 b. Determine the PW of the after-tax cash flows. PWST = $ 16500 c. Determine the AW of the after-tax cash flows. AW $T = $ = -160221.2738 d. Determine the FW of the after-tax cash flows. FW $T = $ e. Determine the combined IRR of the after-tax cash flows. IRRC= -28667.06298 = % f. Determine the combined ERR of the after-tax cash flows. ERRC % g. Determine the real IRR of the after-tax cash flows. IRR₁ = % h. Determine the real ERR of the after-tax cash flows. ERRr %
Transcribed Image Text:ATCF11 = $ ATCF 12 = $ -102581 b. Determine the PW of the after-tax cash flows. PWST = $ 16500 c. Determine the AW of the after-tax cash flows. AW $T = $ = -160221.2738 d. Determine the FW of the after-tax cash flows. FW $T = $ e. Determine the combined IRR of the after-tax cash flows. IRRC= -28667.06298 = % f. Determine the combined ERR of the after-tax cash flows. ERRC % g. Determine the real IRR of the after-tax cash flows. IRR₁ = % h. Determine the real ERR of the after-tax cash flows. ERRr %
Henredon purchases a high-precision programmable router for shaping furniture components for $190,000. It is expected to last 12 years and have a salvage value of $4,400. Henredon will borrow $100,000 at 12.4% over 6 years, paying only interest each year and paying all the principle in the sixth year. It will produce $42,000 in net revenue each year during its life. All dollar amounts are expressed in real dollars. Depreciation follows MACRS 7-year property, taxes are 25%, the real after-tax MARR is 10%, and inflation is 3.9%. a. Determine the actual after-tax cash flows for each year. ATCFO = $ ATCF₁ = $ ATCF₂ = $ ATCF3 = $ ATCF4 = $ ATCF5 = $ ATCF6 = $ ATCF7 = $ ATCF8 = $ ATCF9 = $ ATCF10 = $ -190000 9712.25 4867.25 8192.25 10567.25 12258.25 12263 16500 16500 16500 16500
Transcribed Image Text:Henredon purchases a high-precision programmable router for shaping furniture components for $190,000. It is expected to last 12 years and have a salvage value of $4,400. Henredon will borrow $100,000 at 12.4% over 6 years, paying only interest each year and paying all the principle in the sixth year. It will produce $42,000 in net revenue each year during its life. All dollar amounts are expressed in real dollars. Depreciation follows MACRS 7-year property, taxes are 25%, the real after-tax MARR is 10%, and inflation is 3.9%. a. Determine the actual after-tax cash flows for each year. ATCFO = $ ATCF₁ = $ ATCF₂ = $ ATCF3 = $ ATCF4 = $ ATCF5 = $ ATCF6 = $ ATCF7 = $ ATCF8 = $ ATCF9 = $ ATCF10 = $ -190000 9712.25 4867.25 8192.25 10567.25 12258.25 12263 16500 16500 16500 16500
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