Below you can find the problem I need you to solve. As you will notice is similar to the one I sent you before. The only difference is the in this case the WACC must be used to calculate the present value for the previously calculated cash flows. Please use Excel to make all the calculations so I can check what you did and the process. If you could finish this by the 15 it would be great because I can correct this and send the approval to the Registrar before leaving on the 16th. Feel free to contact me if you have any questions or problems when solving it. PROBLEM Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully depreciated vans, which you think you can sell for $4,100 each and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $40,000 each in the configuration you want them and can be depreciated using MACRS over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $4,800 each. If your cost of capital is 12 percent and your firm faces a 21 percent tax rate, what will the cash flows for this project be? Suppose the company's capital structure is 65% equity and 35% debt. The pre-tax cost of debt is 6.5% and the pre-tax cost of equity is 13%. Calculate the WACC and the present value for the project's cash flows. Note: Round your answers to the nearest dollar amount and use two decimals for the WACC. Year FCF 0 1 2 3 4 5 6 WACC PV FCF
Below you can find the problem I need you to solve. As you will notice is similar to the one I sent you before. The only difference is the in this case the WACC must be used to calculate the present value for the previously calculated cash flows. Please use Excel to make all the calculations so I can check what you did and the process. If you could finish this by the 15 it would be great because I can correct this and send the approval to the Registrar before leaving on the 16th. Feel free to contact me if you have any questions or problems when solving it. PROBLEM Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully depreciated vans, which you think you can sell for $4,100 each and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $40,000 each in the configuration you want them and can be depreciated using MACRS over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $4,800 each. If your cost of capital is 12 percent and your firm faces a 21 percent tax rate, what will the cash flows for this project be? Suppose the company's capital structure is 65% equity and 35% debt. The pre-tax cost of debt is 6.5% and the pre-tax cost of equity is 13%. Calculate the WACC and the present value for the project's cash flows. Note: Round your answers to the nearest dollar amount and use two decimals for the WACC. Year FCF 0 1 2 3 4 5 6 WACC PV FCF
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter14: Statement Of Cash Flows (cashflow)
Section: Chapter Questions
Problem 5R
Related questions
Question
Transcribed Image Text:Below you can find the problem I need you to solve. As you will notice is similar to the one I sent you before. The
only difference is the in this case the WACC must be used to calculate the present value for the previously
calculated cash flows.
Please use Excel to make all the calculations so I can check what you did and the process. If you could finish this
by the 15 it would be great because I can correct this and send the approval to the Registrar before leaving on
the 16th. Feel free to contact me if you have any questions or problems when solving it.
PROBLEM
Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be
replacing 5 fully depreciated vans, which you think you can sell for $4,100 each and which you could probably
use for another 2 years if you chose not to replace them. The NV vans will cost $40,000 each in the configuration
you want them and can be depreciated using MACRS over a 5-year life, but you are unable to make use of either
bonus depreciation or Section 179 expensing. Expected yearly before-tax cash savings due to acquiring the new
vans amounts to about $4,800 each. If your cost of capital is 12 percent and your firm faces a 21 percent tax
rate, what will the cash flows for this project be?
Suppose the company's capital structure is 65% equity and 35% debt. The pre-tax cost of debt is 6.5% and the
pre-tax cost of equity is 13%. Calculate the WACC and the present value for the project's cash flows.
Note: Round your answers to the nearest dollar amount and use two decimals for the WACC.
Year
FCF
0
1
2
3
4
5
6
WACC
PV FCF
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning