EE printing is in the evaluation process for the acquisition of a new computer system. The total depreciablebase (cost plus installation) is $180,000.The new equipment will increase Earnings before depreciation and taxes by $60,000 during years 1 to 3 and$32,000 during years 4 to 6.EE marginal tax rate is 40% and Cost of Capital is 11%Calculate the Payback PeriodPRESENT YOUR ANSWER ROUNDED TO 2 DECIMAL PLACES

Payback period is a financial metric used to evaluate the length of time it takes to recoup the…

Answered: EE printing is in the evaluation…

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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As a member of UA Corporation's financial staff, you must estimate the Year 1 cash flow for a proposed project with the following data. Under the new tax law, the equipment used in the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. What is the Year 1 cash flow? Do not round the intermediate calculations and round the final answer to the nearest whole number. Sales revenues, each year $45,500 Other operating costs $22,522 Interest expense $4,000 Tax rate 25.0%
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Required information A potential investment has a cost of $395,000 and a useful life of 5 years. Annual cash sales from the investment are expected to be $255,338 and annual cash operating expenses are expected to be $100,588. The expected salvage value at the end of the investment's life is $50,000. The company has a before-tax discount rate of 17%. Required: Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (i.e. .055 = 5.5%). Enter negative amounts with a minus sign.) Annual PMT of the investment FV of the investment NPV of the investment IRR of the investment 0000 $
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3. Solar Solutions has purchased new manufacturing equipment that cost $400,000. Calculate the yearly tax savings from the CCA tax shield for the next three years. Assume that the income tax rate is 30%, the CCA rate is 30%, and the weighted-average cost of capital (WACC) is 12%. Assume that CCA in the first year is subject to the accelerated depreciation method for the year of acquisition. (Hint. Use Microsoft Excel to calculate the discount factor(s).) (Do not round your intermediate calculations. Round your final answers to 2 decimal places.) X Answer is complete but not entirely correct. Year 1 2 3 $ $ $ PV of Tax Savings 91,071.43 x 56,919.64 X 35,574.78 X
A firm has invested $50,000 in equipment with a 5-year useful life. The machinery will have a salvage value of $5,000. The annual benefits from the machinery are $13,000 for the first year and increase by $2,000 per year. Assume a combined 30% income tax rate, and the firm uses the SOYD depreciation. Calculate the before-tax IRR. Calculate the after-tax IRR.
D1. Answer ASAP. Please complete all parts correctly.
Steven Appraisals is appraising a commercial office building for refinancing. The company is using the expected future revenue method of determining the value of the building today. Assume the building is fully leased and expected to remain that way. Annual rental revenue is $209000 per year. The expected life of the building is 20 years. Assuming an annual return of 13%, what is the current value of the office building? a. $1468173 b. $1350637 c. $4180000 d. $1541499 Note :- step by step answer required
F
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The Libby & Lacy Company is considering a new construction project for the new manufacturing plant and ask you to calculate a Net Present Value analysis. The investment for the land parcel is $235,000. The manufacturing plant will be completed at the end of year 1 and costs $388,000. The company expects to increase revenue for the next ten years, : (Yr 1) $225,000, (Yr 2) $328,000, (Yr 3) $164,000, (Yr 4) $143,000, (Yr 5) $116,000, (Yr 6) $110,000, (Yr 7) $95,000, (Yr 8) 74,000, (Yr 9) $40,000, and (Yr 10) $15,000. The roadway to the plant will need to be repaved twice and will cost: (Yr 4) $38,000, and (Yr 8) $67,000. The fixed manufacturing overhead for the company will cost an additional $44,000 each year for the 10 years. Prepare a Net Present Value table using a 12% factor.

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