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

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Verno Inc, is considering Projects L. However company has lost investment information for Project L. Payback period for the projects is 3 years. What is the IRR of the project L ? 01234 CFL -$X. $600. $620. $570. $520 A.11.1% B. 11.08% C. 11.35% D. 11.21% E. 10.95% (No chatgpt answer)
The tax rate of the company is 55% and it uses straight line method of depreciation. The Question. 3. A company is considering an investment proposal to install a estimated cash flows before tax (CFBT) are 10,000; 11,000; 14,000; 15,000 and v machinery. The project will cost 50,000 with life of 5 years and no salvage value. new 25,000 during years 1,2,3,4 and 5 respectively. Compute: (i) Average rate of return. (ii) NPV at 10% discount rate. (iii) Profitability Index at 10% discount rate. Note : Discount factors at 10% are 0.909, 0.826, 0.751, 0.683 and 0.621 for the years 1,2,3,4 and 5.
! Show Full Solution ! *use Capitalized Cost Formula NOT EXCEL. Answer: P29,536 5. An asset was purchased for P100,000 and retired at the end of 15 years, with a salvage value of P4,000. The annual operating cost was P18,000. Determine the annual cost of the asset based on an interest rate of 8%
Caddis Company acquired a building with a loan that requires payments of $19,000 every six months for 3 years. The annual interest rate on the loan is 8%. What is the present value of the building? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice O O O O $99,600 $114,000 $38,988 $65,402 $48,965
Mark Company quarries limestone, crushes it and sells it to be used in road building. Mark paid P10,000,000 for a certain quarry. The property can be sold for P3,000,000 after production ceases. Estimated total reserves 10,000,000 Tons quarried through December 31, 2020 Tons quarried in 2021 4,000,000 1,500,000 An engineering study performed in 2021 indicated that on January 1, 2021, 7,500,000 tons of limestone were available. What is the depletion for 2021?
A steel company is trying to decide between two industrial type cranes. Crane A and Crane B are mutually exclusive, and the economics estimates for each are shown below. Crane A Crane B Capital investment Annual expenses Salvage value Life, in years $15,000 $35,000 $5,000 $7,000 $4,000 20 If the MARR is 15%, 1-The present worth of the Crane A Capital investment and Annual expenses over 5 years is 65,295.83 39,765.3 -38,465.4 -14,085.8 Crane A 2-The present worth of Crane B over 20 years is $ 3-The present worth of Crane A over 20 years is $ 105,18.02 53,104.2 -66,296.5 Crane B 28,067.8 114 336.1 55,101.5 61,695.7 -40,6732 4-The recommended alternative is
A dynamic measurement machine used by Renshaw Instruments had an annual cash flow before taxes of $550,000 over its life of 10 years. Its first cost was $1.7 million, it was straight-line depreciated with n = 10 years, and it was sold today for the estimated salvage of $200,000. The company’s Te = 36% and after-tax MARR = 15%. Was the purchase and use of the machine economically justified?
TransITRI is a transportation company with a recent need of a new construction equipment at a first cost of $78,000 (Equation (1)), zero salvage value, and a cash flow before taxes (CFBT) per year t that follows Equation (2). CFBT = $30,000 – 3,000t (for t = 1, 2, … T) (1) CFBT = - $78,000 (for t =0) (2) Calculate the PW if the economic life of similar machinery is 9 years, while the MARR is 16%
TransITRI is a transportation company with a recent need of a new construction equipment at a first cost of $78,000 (Equation (1)), zero salvage value, and a cash flow before taxes (CFBT) per year t that follows Equation (2). CFBT = $30,000 – 3,000t (for t = 1, 2, … T) (1) CFBT = - $78,000 (for t =0) (2) Calculate the PW if the economic life of similar machinery is 7 years, while the MARR is 16%

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