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 $4,700 a piece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $46,000 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 $5,400 each. If your cost of capital is 8 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.) FCF Year 0 1 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 $4,700 a piece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $46,000 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 $5,400 each. If your cost of capital is 8 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.) FCF Year 0 1 2 3 4 5 6
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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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 $4,700 a piece and which you could probably use for another 2 years if you chose
not to replace them. The NV vans will cost $46,000 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 $5,400 each. If your cost of capital is 8 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.)
FCF
Year
0
1
2
3
4
5
6
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