Particulars Amount ($) Sales 2,735,000 Less: Variable expenses 45% 1,230,750 Contribution margin 1,504,250 Less: Fixed expenses 735,000 Earnings before depreciation , interest and taxes 769,250 Less: Depreciation 595,000 Earnings after depreciation or EBIT 174,250 Add: Depreciation 595,000 Annual cash inflow 769,250 Computation of actual net present value is required to be computed when variable expenses are changed to 45%.

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Answer 1

Question

Chapter 14, Problem 13F15

NPV is computed by deducting initial investment amount from the present value.

Project’s actual net present value will be calculated in the following way, when variable expenses changes to 45%:

Computation of annual cash inflow when variable expenses changed to 45%:

To determine

Particulars Amount ($)

Sales 2,735,000

Less: Variable expenses 45% 1,230,750

Contribution margin 1,504,250

Less: Fixed expenses 735,000

Earnings before depreciation, interest and taxes 769,250

Less: Depreciation 595,000

Earnings after depreciation or EBIT 174,250

Add: Depreciation 595,000

Annual cash inflow 769,250

Computation of actual net present value is required to be computed when variable expenses are changed to 45%.

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Answer 2

Question

Chapter 14, Problem 13F15

NPV is computed by deducting initial investment amount from the present value.

Project’s actual net present value will be calculated in the following way, when variable expenses changes to 45%:

Computation of annual cash inflow when variable expenses changed to 45%:

To determine

Particulars Amount ($)

Sales 2,735,000

Less: Variable expenses 45% 1,230,750

Contribution margin 1,504,250

Less: Fixed expenses 735,000

Earnings before depreciation, interest and taxes 769,250

Less: Depreciation 595,000

Earnings after depreciation or EBIT 174,250

Add: Depreciation 595,000

Annual cash inflow 769,250

Computation of actual net present value is required to be computed when variable expenses are changed to 45%.

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Answer 3

Question

Chapter 14, Problem 13F15

NPV is computed by deducting initial investment amount from the present value.

Project’s actual net present value will be calculated in the following way, when variable expenses changes to 45%:

Computation of annual cash inflow when variable expenses changed to 45%:

To determine

Particulars Amount ($)

Sales 2,735,000

Less: Variable expenses 45% 1,230,750

Contribution margin 1,504,250

Less: Fixed expenses 735,000

Earnings before depreciation, interest and taxes 769,250

Less: Depreciation 595,000

Earnings after depreciation or EBIT 174,250

Add: Depreciation 595,000

Annual cash inflow 769,250

Computation of actual net present value is required to be computed when variable expenses are changed to 45%.

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Answer 4

Question

Chapter 14, Problem 13F15

NPV is computed by deducting initial investment amount from the present value.

Project’s actual net present value will be calculated in the following way, when variable expenses changes to 45%:

Computation of annual cash inflow when variable expenses changed to 45%:

To determine

Particulars Amount ($)

Sales 2,735,000

Less: Variable expenses 45% 1,230,750

Contribution margin 1,504,250

Less: Fixed expenses 735,000

Earnings before depreciation, interest and taxes 769,250

Less: Depreciation 595,000

Earnings after depreciation or EBIT 174,250

Add: Depreciation 595,000

Annual cash inflow 769,250

Computation of actual net present value is required to be computed when variable expenses are changed to 45%.

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Answer 5

Chapter 14, Problem 13F15

NPV is computed by deducting initial investment amount from the present value.

Project’s actual net present value will be calculated in the following way, when variable expenses changes to 45%:

Computation of annual cash inflow when variable expenses changed to 45%:

To determine

Particulars Amount ($)

Sales 2,735,000

Less: Variable expenses 45% 1,230,750

Contribution margin 1,504,250

Less: Fixed expenses 735,000

Earnings before depreciation, interest and taxes 769,250

Less: Depreciation 595,000

Earnings after depreciation or EBIT 174,250

Add: Depreciation 595,000

Annual cash inflow 769,250

Computation of actual net present value is required to be computed when variable expenses are changed to 45%.

Answer 6

Chapter 14, Problem 13F15

NPV is computed by deducting initial investment amount from the present value.

Project’s actual net present value will be calculated in the following way, when variable expenses changes to 45%:

Computation of annual cash inflow when variable expenses changed to 45%:

To determine

Particulars Amount ($)

Sales 2,735,000

Less: Variable expenses 45% 1,230,750

Contribution margin 1,504,250

Less: Fixed expenses 735,000

Earnings before depreciation, interest and taxes 769,250

Less: Depreciation 595,000

Earnings after depreciation or EBIT 174,250

Add: Depreciation 595,000

Annual cash inflow 769,250

Computation of actual net present value is required to be computed when variable expenses are changed to 45%.

Answer 7

Chapter 14, Problem 13F15

NPV is computed by deducting initial investment amount from the present value.

Project’s actual net present value will be calculated in the following way, when variable expenses changes to 45%:

Computation of annual cash inflow when variable expenses changed to 45%:

To determine

Particulars Amount ($)

Sales 2,735,000

Less: Variable expenses 45% 1,230,750

Contribution margin 1,504,250

Less: Fixed expenses 735,000

Earnings before depreciation, interest and taxes 769,250

Less: Depreciation 595,000

Earnings after depreciation or EBIT 174,250

Add: Depreciation 595,000

Annual cash inflow 769,250

Computation of actual net present value is required to be computed when variable expenses are changed to 45%.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 14.A - Prob. 1E Ch. 14.A - Prob. 2E Ch. 14.A - Prob. 3E Ch. 14.A - Prob. 4E Ch. 14.A - Exercises 13A-5 Basic Present Value Concepts...Ch. 14.A - Prob. 6E Ch. 14.C - Prob. 1E Ch. 14.C - Prob. 2E Ch. 14.C - PROBLEM 13C-3 Income Taxes and Net Present Value...Ch. 14.C - Prob. 4P

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Chapter 14 Solutions

Particulars	Amount ($)
Sales	2,735,000
Less: Variable expenses 45%	1,230,750
Contribution margin	1,504,250
Less: Fixed expenses	735,000
Earnings before depreciation, interest and taxes	769,250
Less: Depreciation	595,000
Earnings after depreciation or EBIT	174,250
Add: Depreciation	595,000
Annual cash inflow	769,250