The present worth of the first

Answer to Problem 39P
The present worth of the first
Explanation of Solution
Given:
Cost of the barge is
Expected income from the barge is
Growth in income is
Expenses for the first year is
Growth in expenses is
The tax rate is
MARR is
Concept used:
Write the equation for the base book value.
Write the formula to calculate the taxable income.
Here, the taxable income is
Write the formula to calculate the taxable amount.
Here, the taxable amount is
Write the formula to calculate the after tax cash flow.
Here, the after tax cash flow is
Calculation:
The projected revenue for the first year is
The revenue of the project is growing
Calculate the project revenue for second year.
Calculate the project revenue for third year.
Calculate the project revenue for fourth year.
The operating and maintenance cost for first year is
The expenses of operating and maintenance cost is increasing by
Calculate the operating and maintenance cost for second year.
Calculate the operating and maintenance cost for third year.
Calculate the operating and maintenance cost for fourth year.
Calculate the net revenue as shown in table below.
Year | Projected revenue (a) | Operating and maintenance cost (b) | Net revenue |
Calculate the book value by using MACRS percentage rate as shown in table below.
Year | MACR rate (a) | Base book value (b) | Depreciation charge |
Net book value |
Calculate the gain on the salvage value as shown below.
Substitute
Calculate the tax effect as shown below.
Substitute
Calculate the net salvage value after fourth year as shown below.
Substitute
Take before tax cash flow for the first year is
Calculate the taxable income for the first year.
Substitute
Calculate income tax for first year as shown below.
Substitute
Calculate the after tax cash flow for the first year as shown below.
Substitute
Calculate the after tax cash flow as shown in table below for all the subsequent years.
Year | BTCF | Depreciation | Taxable income | Income tax | ATCF |
Write the equation for present worth factor of annuity (PW).
Here, the present worth is PW, initial payment is D, present value of money is P, interest rate is i, the after tax cash flow is A, the net salvage amount is F, and the number of year is n.
Substitute
Conclusion:
Therefore, the present worth of the first
Want to see more full solutions like this?
Chapter 12 Solutions
ENGR.ECONOMIC ANALYSIS W/DASHBOARD
- and u (C1, C2) = 1/2 = f) Derive analytically and show graphically the solution under other util- ity functions such as u (C1, C2) ac₁+bc2 where a, b > 0, u (C1, C2) = ac₁+bc1/2 acbc2 (assume that the agent is sufficiently rich to avoid the corner solution). What of these utility functions reflects best your own preferences (or indicate other utility function that represent your pref- erences).arrow_forwardnot use ai please don'tarrow_forwardnot use ai pleasearrow_forward
- Please give me true answer this financial accounting questionarrow_forwardnot use aiarrow_forwardExplain if any states are not a “friendly” place for tax preparers, payday lenders, title pawn lenders, and “credit approved” used car dealers to operate in and what they have done, regulation-wise.arrow_forward
- Explain the regulation or lack of regulation of payday lenders, title pawn lenders, and “credit-approved” used car dealers in Alabama.arrow_forwardExplain why people should avoid the business model of payday lenders, title pawn lenders, and “credit approved” used car dealers.arrow_forwardExplain why people fall prey to payday lenders, title pawn lenders, and “credit-approved” used car dealers.arrow_forward
- Please answer the following.arrow_forwardThe figure below shows the hypothetical domestic supply and demand for baseball caps in the country of Spain. Domestic Supply and Demand for Baseball Caps Price (€ per cap) 10 9 8 7 6 5 4 3 2 1 0 Spain Dd 10 20 30 40 50 60 70 80 90 100 Baseball caps (thousands per month) Suppose that the world price of baseball caps is €2 and there are no import restrictions on this product. Assume that Spanish consumers are indifferent between domestic and imported baseball caps. Instructions: Enter your answers as whole numbers. a. What quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand b. What quantity of baseball caps will be imported? thousand Now suppose a tariff of €1 is levied against each imported baseball cap. c. After the tariff is implemented, what quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand d. After the tariff is implemented, what quantity of baseball caps will be imported? thousandarrow_forwardMay I please have the solutions for the following assignment? as 2025arrow_forward
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education





