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
New Project Analysis | ||||
Expected | Salvage | |||
$ Cost | Use, Years | Value | ||
New Equipment | 70,000.0 | 3.0 | 30,000.0 | |
Install Cost, New Equipment | 15,000.0 | |||
Increase, Net Working Capital | 4,000.0 | |||
Before-Tax Cost-Savings/Year | 25,000.0 | |||
Marginal Tax Rate | 40.00% | |||
Cost Of Capital | 10.00% | |||
Year 1 | Year 2 | Year 3 | Year 4 | |
3-Year MACRS |
33.33% | 44.45% | 14.81% | 7.41% |
Answers | Year 1 | Year 2 | Year 3 | |
Depreciation Tax Savings/Year | ||||
After Tax Cost Savings/Year | ||||
Year 3 Book Value | ||||
Taxes On Sale, Year 3 | ||||
After-Tax Salvage Value | ||||
Additional Year 3 Cash Flow | ||||
Year 0 | Year 1 | Year 2 | Year 3 | |
Net Cash Flow | ||||
Net Cash Flow | ||||
Purchase System? |
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