Based on the above after tax cash flows, what is the NPW of this project if the interest rate is 12%? CCA depreciationYearBn-1ССA Dep.Bn1$250,000$37,500$212,5002$212,500$63,750$148,7503$148,750$44,625$104,1254$104,125$31,238$72,8885$72,888$21,866$51,021Calculation of netSalvageUCC at year5=$51,021.25Proceed S=$100,000.00Gain on disp.=$48,978.75Tax effect G=$17,14256Net S=$82,857.44Year12345$45,000 $45,000$44,625 $31,238sOR$45,000$45,000$45,000Dep$37,500$63,750$21,866BTCF$7500-$18,750$375$13,763$23,134Taxes$2625-$6563$131$4817$8097NetProfit$4875-$12,188$244$8946$15,037Dep$37,500$63,750$44,625 $31,238$21,866Investme|-$250,000ntSalvage$82,857NetATCF|-$250,000$42,375$51,563$44,869 $40,183$119,761

Net present value (NPV) is used to determine the present value of all future cash flows. Net present…

Answered: Based on the above after tax cash…

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Based on the above after tax cash flows, what is the NPW of this project if the interest rate is 12%?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

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Question

Based on the above after tax cash flows, what is the NPW of this project if the interest rate is 12%?

CCA depreciation
Year
Bn-1
ССA Dep.
Bn
1
$250,000
$37,500
$212,500
2
$212,500
$63,750
$148,750
3
$148,750
$44,625
$104,125
4
$104,125
$31,238
$72,888
5
$72,888
$21,866
$51,021
Calculation of net
Salvage
UCC at year
5=$51,021.25
Proceed S=$100,000.00
Gain on disp.=$48,978.75
Tax effect G=$17,14256
Net S=$82,857.44
Year
1
2
3
4
5
$45,000 $45,000
$44,625 $31,238s
OR
$45,000
$45,000
$45,000
Dep
$37,500
$63,750
$21,866
BTCF
$7500
-$18,750
$375
$13,763
$23,134
Taxes
$2625
-$6563
$131
$4817
$8097
Net
Profit
$4875
-$12,188
$244
$8946
$15,037
Dep
$37,500
$63,750
$44,625 $31,238
$21,866
Investme
|-$250,000
nt
Salvage
$82,857
Net
ATCF
|-$250,000
$42,375
$51,563
$44,869 $40,183
$119,761

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