Problem 12-15 Project Cash Flows (LG12-5) Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully- depreciated vans, which you think you can sell for $4,500 a piece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $44,000 each in the configuration you want them, and can be depreciated using MACRS over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $5,200 each. If your cost of capital is 10 percent and your firm faces a 21 percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.) Year FCF 0 2 3 4 5 6
Problem 12-15 Project Cash Flows (LG12-5) Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully- depreciated vans, which you think you can sell for $4,500 a piece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $44,000 each in the configuration you want them, and can be depreciated using MACRS over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $5,200 each. If your cost of capital is 10 percent and your firm faces a 21 percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.) Year FCF 0 2 3 4 5 6
Chapter10: Project Cash Flows And Risk
Section: Chapter Questions
Problem 5PROB
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Raghubhai
Transcribed Image Text:Problem 12-15 Project Cash Flows (LG12-5)
Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully-
depreciated vans, which you think you can sell for $4,500 a piece and which you could probably use for another 2 years if you chose
not to replace them. The NV vans will cost $44,000 each in the configuration you want them, and can be depreciated using MACRS
over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax
cash savings due to acquiring the new vans amounts to about $5,200 each. If your cost of capital is 10 percent and your firm faces a 21
percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.)
Year
FCF
0
2
3
4
5
6
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