1. Determine the Payback period using after-tax cash flows:2. Determine the Net present value using after-tax cash flows (use 3 decimal places for the PV factor) Bert Corporation is considering an investment in equipment for $150,000.Data related to the investment are as follows:Income beforeDepreciation and Taxes$60,000Year160,00060,00060,0003460,000Cost of capital is 10 percent.Bert uses the straight-line method of depreciation with mid-year convention for tax purposes. Inaddition, its tax rate is 40 percent and the depreciable life of the equipment is four years with nosalvage value. The equipment is sold at the end of the fifth year.

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Bert Corporation is considering an investment in equipment for $150,000. Data related to the investment are as follows: Income before Depreciation and Taxes $60,000 Year 1 60,000 60,000 3 4 60,000 60,000 Cost of capital is 10 percent. Bert uses the straight-line method of depreciation with mid-year convention for tax purposes. In addition, its tax rate is 40 percent and the depreciable life of the equipment is four years with no salvage value. The equipment is sold at the end of the fifth year.

Bert Corporation is considering an investment in equipment for $150,000. Data related to the investment are as follows: Income before Depreciation and Taxes $60,000 Year 1 60,000 60,000 3 4 60,000 60,000 Cost of capital is 10 percent. Bert uses the straight-line method of depreciation with mid-year convention for tax purposes. In addition, its tax rate is 40 percent and the depreciable life of the equipment is four years with no salvage value. The equipment is sold at the end of the fifth year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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