MUST USE ONLY EXCEL SPREADSHEET FOR THIS PROBLEM A corporation with $7 million in annual taxable income and no state tax is considering two alternatives: Year 0 1-10 11-20 Before-Tax Cash Flow ($1000) Alt 1 Alt 2 (a) Present worth analysis (b) Annual cash flow analysis (c) Rate of return analysis -10,000 4,500 0 -20,000 4,500 4,500 Both alternatives will be depreciated by 40% bonus depreciation taken in year 0 plus 10-year MACRS depreciation. Neither alternative is to be replaced at the end of its useful life. If the corporation has a minimum attractive rate of return of 10% after taxes, which alternative should it choose? Solve the problem by:

MUST USE ONLY EXCEL SPREADSHEET FOR THIS PROBLEM A corporation with $7 million in annual taxable income and no state tax is considering two alternatives: Year 0 1-10 11-20 Before-Tax Cash Flow ($1000) Alt 1 Alt 2 (a) Present worth analysis (b) Annual cash flow analysis (c) Rate of return analysis -10,000 4,500 0 -20,000 4,500 4,500 Both alternatives will be depreciated by 40% bonus depreciation taken in year 0 plus 10-year MACRS depreciation. Neither alternative is to be replaced at the end of its useful life. If the corporation has a minimum attractive rate of return of 10% after taxes, which alternative should it choose? Solve the problem by:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Required information Assume you started a sideline business in commercial photography last year using your then-owned equipment. Due to excellent success, you plan to purchase new equipment and upgrade your studio facility. First cost of equipment, $ -160,000 Annual expenses, $ per year -45,000 Annual revenue, $ per year 75,000 Determine the no-return payback period. The no-return payback period is years.
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1. A pharmaceutical company that manufactures ascorbic acid tablets is investigating two production options that have the estimated cash flows shown ($10 million units). Which one should be selected based on a present worth analysis (in million units) at 10% per year? In- outsourced house Initial Investment -30 Annual cost, $ per year 24 -5 -2 Annual Revenue, $ per 13 year 2 N/A Salvage Value, $ Life
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