DataPoint Engineering is considering the purchase of a new piece of equipment for $200,000. It has an eight-year midpoint of its asset depreciation range (ADR). It will require an additional initial investment of $100,000 in nondepreciable working capital. $25,000 of this investment will be recovered after the sixth year and will provide additional cash flow for that year. Income before depreciation and taxes for the next six are shown in the following table. Use Table 12–11, Table 12–12. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. I can only attach 2 images, please see previously asked question for other images or please let me know how I can ask with 3 images. Year Amount 1 $ 173,000 2 152,000 3 108,000 4 103,000 5 89,000 6 71,000 The tax rate is 25 percent. The cost of capital must be computed based on the following: Cost (aftertax) Weights Debt Kd 5.50 % 30 % Preferred stock Kp 9.20 10 Common equity (retained earnings) Ke 14.00 60 a. Determine the annual depreciation schedule. (Do not round intermediate calculations. Round your depreciation base and annual depreciation answers to the nearest whole dollar. Round your percentage depreciation answers to 3 decimal places.) Year Depreciation Base Percentage Depreciation Annual Depreciation 1 2 3 4 5 6 $0 b. Determine the annual cash flow for each year. Be sure to include the recovered working capital in Year 6. (Do not round intermediate calculations and round your answers to 2 decimal places.) Year Cash Flow 1 2 3 4 5 6 c. Determine the weighted average cost of capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
DataPoint Engineering is considering the purchase of a new piece of equipment for $200,000. It has an eight-year midpoint of its asset
I can only attach 2 images, please see previously asked question for other images or please let me know how I can ask with 3 images.
Year | Amount | ||
1 | $ | 173,000 | |
2 | 152,000 | ||
3 | 108,000 | ||
4 | 103,000 | ||
5 | 89,000 | ||
6 | 71,000 | ||
The tax rate is 25 percent. The cost of capital must be computed based on the following:
Cost (aftertax) |
Weights | ||||||
Debt | Kd | 5.50 | % | 30 | % | ||
Kp | 9.20 | 10 | |||||
Common equity ( |
Ke | 14.00 | 60 | ||||
a. Determine the annual depreciation schedule. (Do not round intermediate calculations. Round your depreciation base and annual depreciation answers to the nearest whole dollar. Round your percentage depreciation answers to 3 decimal places.)
|
b. Determine the annual cash flow for each year. Be sure to include the recovered working capital in Year 6. (Do not round intermediate calculations and round your answers to 2 decimal places.)
|
c. Determine the weighted average cost of capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
d-1. Determine the
![Table 12-12 Depreciation percentages (expressed In declmals)
7-Year
Depreciation
Year
3-Year
5-Year
10-Year
15-Year
20-Year
MACRS
MACRS
MACRS
MACRS
MACRS
MACRS
1
......
0.333
0.200
0.143
0.100
0.050
0.038
0.445
0.320
0.245
0.180
0.095
0.072
0.148
0.192
0.175
0.144
0.086
0.067
0.074
0.115
0.125
0.115
0.077
0.062
..* *****W
0.115
0.089
0.092
0.069
0.057
0.058
0.089
0.074
0.062
0.053
7.
0.089
0.066
0.059
0.045
T:TO_BLURR * E
8.
0.045
0.066
0.059
0.045
6.
0.065
0.059
0.045
10
0.065
0.059
0.045
11
0.033
0.059
0,045
12
0.059
0.045
13
0.045
14
0.059
0.045
15
0.059
0.045
16
0.030
0.045
17
0.045
18
0.045
19
0.045
20
0.045
21
0.017
1.000
1.000
1.000
1.000
1.000
1.000
30
stv A
OG w
20
F3
000
F2
F4
F5
F6
F7
F8
2.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb8e25a94-f8b1-4f85-8854-466b52469d9a%2Fd871306c-45ef-4634-ac2b-1b0010ce0b57%2Ftaorm4h_processed.jpeg&w=3840&q=75)
![m edaConnes Production/bne/tinance/block_ 17e/Block17e AppB.pdr
d- Student...
EveryDollar
Sunrise Elementary
ParentVUE
Other Bookmarks
Re
1/ 2
99%
Open in Acrobat
Appendix B Present value of $1, PVF
1
PV = FV
(1+"]
Percent
Period
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
0.990
0.980
0.971
0.962
0.952
0.943
0.935
0.926
0.917
0.909
0.901
0.893
0.980
0.961
0.943
0.925
0.907
0.890
0.873
0.857
0.842
0.826
0.812
0.797
0.971
0.942
0.915
0.889
0.864
0.840
0.816
0.794
0.772
0.751
0.731
0.712
0.961
0.924
0.888
0.855
0.823
0.792
0.763
0.735
0.708
0.683
0.659
0.636
0.951
0.906
0.863
0.822
0.784
0.747
0.713
0.681
0.650
0.621
0.593
0.567
0.942
0.888
0.837
0.790
0.746
0.705
0.666
0.630
0.596
0.564
0.535
0.507
0.933
0.871
0.813
0.760
0.711
0.665
0.623
0.583
0.547
0.513
0.482
0.452
0.923
0.853
0.789
0.731
0.677
0.627
0.582
0.540
0.502
0.467
0.434
0.404
9.
0.914
0.837
0.766
0.703
0.645
0.592
0.544
0.500
0.460
0.424
0.391
0.361
10
0.905
0.820
0.744
0.676
0.614
0.558
0.508
0.463
0.422
0.386
0.352
0.322
11
0.896
0.804
0.722
0.650
0.585
0.527
0.475
0.429
0.388
0.350
0.317
0.287
12
0.887
0.788
0.701
0.625
0.557
0.497
0.444
0.397
0.356
0.319
0.286
0.257
13
0.879
0.773
0.681
0.601
0.530
0.469
0.415
0.368
0.326
0.290
0.258
0.229
14
0.870
0.758
0.661
0.577
0.505
0.442
0.388
0.340
0.299
0.263
0.232
0.205
15
0.861
0.743
0.642
0.555
0.481
0.417
0.362
0.315
0.275
0.239
0.209
0.183
16
0.853
0.728
0.623
0.534
0.458
0.394
0.339
0.292
0.252
0.218
0.188
0.163
17
0.844
0.714
0.605
0.513
0.436
0.371
0.317
0.270
0.231
0.198
0.170
0.146
18
0.836
0.700
0.587
0.494
0.416
0.350
0.296
0.250
0.212
0.180
0.153
0.130
19
0.828
0.686
0.570
0.475
0.396
0.331
0.277
0.232
0.194
0.164
0.138
0.116
20
0.820
0.673
0.554
0.456
0.377
0.312
0.258
0.215
0.178
0.149
0.124
0.104
25
0.780
0.610
0.478
0.375
0.295
0.233
0.184
0.146
0.116
0.074
0.059
760
30
0.742
0.552
0.412
0.308
0.231
0.174
0.131
0.099
0.075
0.057
0.044
0.033
40
0.672
0.453
0.307
0.208
0.142
0.097
0.067
0.046
0.032
0.022
0.015
0.011
50
0.608
0.372
0.228
0.141
0.087
0.054
0.034
0.021
0.013
0.009
0.005
0.003
etv A O
MacBook Air
O00
O00
F4
II
F8
F5
F6
F7
F9
F10](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb8e25a94-f8b1-4f85-8854-466b52469d9a%2Fd871306c-45ef-4634-ac2b-1b0010ce0b57%2Fo9xroleb_processed.jpeg&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
![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)
![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)
![Fundamentals of Financial Management (MindTap Cou…](https://www.bartleby.com/isbn_cover_images/9781337395250/9781337395250_smallCoverImage.gif)
![Corporate Finance (The Mcgraw-hill/Irwin Series i…](https://www.bartleby.com/isbn_cover_images/9780077861759/9780077861759_smallCoverImage.gif)