Chevron Chemical Company in Texas, acquired new equipment for its polyethylene processing line. The equipment has a first cost of $400,000, a life of only 3 years, and a salvage value of 10% of its first cost. a. Complete the following After-Tax CF Table for the above equipment investment. Effective T is 0.35 (put numbers only without $ sign) Year NOI Pand S CFBT TI Taxes (35%) CFAT -400,000 -400,000 -400,000 1 210,000 210,000 133,320 76,680 26,838 2 210,000 210,000 177,800 32,200 198,730 3 210,000 40,000 59,240 52,766 197,234 b. Put the formula (equation) for calculating the PW of the CFAT at MARR = 10% substituting all variables (use factor notation) PW = -400000 +
Chevron Chemical Company in Texas, acquired new equipment for its polyethylene processing line. The equipment has a first cost of $400,000, a life of only 3 years, and a salvage value of 10% of its first cost. a. Complete the following After-Tax CF Table for the above equipment investment. Effective T is 0.35 (put numbers only without $ sign) Year NOI Pand S CFBT TI Taxes (35%) CFAT -400,000 -400,000 -400,000 1 210,000 210,000 133,320 76,680 26,838 2 210,000 210,000 177,800 32,200 198,730 3 210,000 40,000 59,240 52,766 197,234 b. Put the formula (equation) for calculating the PW of the CFAT at MARR = 10% substituting all variables (use factor notation) PW = -400000 +
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
Problem 1PS
Related questions
Question
![Chevron Chemical Company in Texas, acquired new equipment for its polyethylene processing line. The equipment has a fırst cost of
$400,000, a life of only 3 years, and a salvage value of 10% of its first cost.
a. Complete the following After-Tax CF Table for the above equipment investment. Effective T is 0.35 (put numbers only without $ sign)
Year
NOI
Pand S
CFBT
TI
Taxes (35%)
CFAT
-400,000
-400,000
-400,000
1
210,000
210,000
133,320
76,680
26,838
2
210,000
210,000
177,800
32,200
198,730
3
210,000
40,000
59,240
52,766
197,234
b. Put the formula (equation) for calculating the PW of the CFAT at MARR = 10% substituting all variables (use factor notation)
PW = -400000
+||
+
+](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F44031dcc-2a13-4d27-b2db-2201b2e44014%2F13990e8f-dcde-4ed8-a7ff-bf89b00c53c6%2F2muy1go_processed.png&w=3840&q=75)
Transcribed Image Text:Chevron Chemical Company in Texas, acquired new equipment for its polyethylene processing line. The equipment has a fırst cost of
$400,000, a life of only 3 years, and a salvage value of 10% of its first cost.
a. Complete the following After-Tax CF Table for the above equipment investment. Effective T is 0.35 (put numbers only without $ sign)
Year
NOI
Pand S
CFBT
TI
Taxes (35%)
CFAT
-400,000
-400,000
-400,000
1
210,000
210,000
133,320
76,680
26,838
2
210,000
210,000
177,800
32,200
198,730
3
210,000
40,000
59,240
52,766
197,234
b. Put the formula (equation) for calculating the PW of the CFAT at MARR = 10% substituting all variables (use factor notation)
PW = -400000
+||
+
+
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
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 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
![FUNDAMENTALS OF CORPORATE FINANCE](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
![FUNDAMENTALS OF CORPORATE FINANCE](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Foundations Of Finance](https://www.bartleby.com/isbn_cover_images/9780134897264/9780134897264_smallCoverImage.gif)
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
![Fundamentals of Financial Management (MindTap Cou…](https://www.bartleby.com/isbn_cover_images/9781337395250/9781337395250_smallCoverImage.gif)
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
![Corporate Finance (The Mcgraw-hill/Irwin Series i…](https://www.bartleby.com/isbn_cover_images/9780077861759/9780077861759_smallCoverImage.gif)
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education