2.Consider the following net cash flow of a new machine whose useful life is 5 years and salvagevalue is 5,000 $.Year345Cash-65,00020,00025,00030,00035,00040,000Double declining balance depreciation is used for the depreciation of the machine. Capital gains aretaxed at 30% and ordinary income is taxed at 40%. Calculate the rate of return of after tax cash flow.

Rate of return is annual income earned on the investment. That should be sufficient to satisfy the…

Answered: Consider the following net cash flow of…

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

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1. A company plans to invest in one of two machines, machine A and Machine B. Machine A costs 80000 cedis and has a salvage value of 7000. Machine B on the other hand costs 120000 cedis and has a salvage value of 12000 cedis. Both machines have a useful life of five years. The year end cash flows for both machines are as given below. Period Machine A Machine B 25000 30000 5 45000 40000 20000 19000 50000 50000 50000 27000 3 Using the payback period criterion, what is the payback period for both machines. Machine A: Machine B: years and years and days days a. Using the NPV criterion, at an interest rate of 20% what is the NPV of Machine A? Answer: b. If machine B now has a useful life of 6 years where the cashflow for year 6 is 14000 cedis with a salvage lue of 5000 cedis, what is the annual worth of machines A and B
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2. If an asset costs $70,950 and is expected to have a salvage value of $949 at the end of five year life, and generates annual cash net cash inflows of $4,447 each year, the cash payback period rounding to two decimal places is
Initial cash flow: Basic calculation Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was purchased 3 years ago at an installed cost of $19,400; it was being depreciated under MACRS using a 5-year recovery period. (See table for the applicable depreciation percentages.) The existing machine is expected to have a usable life of at least 5 more years. The new machine costs $35,600 and requires $4,900 in installation costs; it will be depreciated using a 5-year recovery period under MACRS. The existing machine can currently be sold for $25,500 without incurring any removal or cleanup costs. The firm is subject to a 21% tax rate. Calculate the initial cash flow associated with the proposed purchase of a new grading machine. The initial cash flow will be $. (Round to the nearest dollar.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Rounded Depreciation…
The salvage value of an asset is RM75,000. The annual cash flow is RM 10,500, and the networking capital is RM4,800. If the tax rate is 28%, what is the terminal cash flow of the asset?
Tipton Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in equipment Annual cash inflows Salvage value of equipment Life of the investment Required rate of return O 5 years O 15 years O2 years O 7.143 years $ 30,000 $ 6,000 $0 Chapter 8 15 10 The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period for the investment is: years %
Based on the information given in the table, find the : i) Profitability index
MANUAL SOLUTION AND CASH FLOW DIAGRAM !!
10- In a capital project, an old machine, which was purchased at a cost of 600.000 TL 3 years ago and had a useful life of 5 years will be sold now at a price of 300.000 TL. The machine also had a salvage value of X. The company applies accelerated depreciation method. Tax rate is 40%. In order to produce a net disposal cash inflow of 269.472 TL, what should be the X? 60.000 TL 80.000 TL 100.000 TL 120.000 TL
Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 6% return from its investments. $ (260,000) 150,000 146,000 117,000 Initial investment Net cash flows: Year 1 Year 2 Year 3 Compute this machine's net present value. (PV of $1. EV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided. Round all present value factors to 4 decimal places. Round present value amounts to the nearest dollar.) Year 1 Year 2 Year 3 Totals Initial investment Net present value Net Cash Flow $ 0 Present Value Factor Present Value of Net Cash Flows $ $ 0
Hello, just need help with the annual net cash flow portion. I haven't computed it in this method
Accounting Rate of Return Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Cobre Company is considering the purchase of new equipment that will speed up the process for extracting copper. The equipment will cost $4,100,000 and have a life of 5 years with no expected salvage value. The expected cash flows associated with the project are as follows: Year Cash Revenues Cash Expenses 1 $6,000,000 $4,800,000 2 6,000,000 4,800,000 3 6,000,000 4,800,000 4 6,000,000 4,800,000 5 6,000,000 4,800,000 Emily Hansen is considering investing in one of the following two projects. Either project will require an investment of $75,000. The expected cash revenues minus cash expenses for the two projects follow. Assume each project is depreciable. Year Project A Project B 1 $22,500 $22,500 2 30,000 30,000 3 45,000 45,000 4 75,000 22,500 5 75,000 22,500 Suppose that a…

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Consider the following net cash flow of a new machine whose useful life is 5 years and is 5,000 $. 1 2 3 4 5 ר -65,000 20,000 25,000 30,000 35,000 40,00 le declining balance depreciation is used for the depreciation of the machine. Capital g