EAC - Burnout Batteries Initial Cost = $36 each 3-year life...

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Unformatted text preview: Burnout Batteries Initial Cost = $36 each 3-year life $100 per year to keep charged Expected salvage = $5 Straight-line depreciation Income Statement year Revenue Costs Depreciation Taxes OCF year OCF chang(NWC) NCS salvage tax on salvage after-tax salvage CFFA PV(CFFA) NPV NPV EAC 0 1 0 100 10.33 -37.51 -62.49 1 -62.49 0 0 2 0 100 10.33 -37.51 -62.49 2 -62.49 0 0 3 0 100 10.33 -37.51 -62.49 3 -62.49 0 5 5 0 5 -57.49 -37.8 Long-lasting Batteries Initial Cost = $60 each 5-year life $88 per year to keep charged Expected salvage = $5 Straight-line depreciation Income Statement year Revenue Costs Depreciation Taxes OCF year OCF chang(NWC) NCS salvage tax on salvage after-tax salvage CFFA PV(CFFA) NPV NPV EAC 0 0 -36 -36 -62.49 -62.49 -36 -54.34 -47.25 -175.38 ($175.38) (using the Excel formula) ($52.32) Long-lasting Batteries Initial Cost = $60 each 5-year life $88 per year to keep charged Expected salvage = $5 Straight-line depreciation Income Statement 0 Depreciation 1 0 88 11 -33.66 -54.34 1 -54.34 0 0 2 0 88 11 -33.66 -54.34 2 -54.34 0 0 tax rate discount rate 0.34 0.15 3 0 88 11 -33.66 -54.34 3 -54.34 0 0 4 0 88 11 -33.66 -54.34 4 -54.34 0 0 5 0 88 11 -33.66 -54.34 5 -54.34 0 5 5 0 5 -49.34 -24.53 0 0 -60 salvage tax on salvage after-tax salvage -60 -54.34 -54.34 -54.34 -60 -47.25 -41.09 -35.73 -239.67 ($239.67) (using the Excel formula) ($71.50) -54.34 -31.07 Burnout Batteries Initial Cost = $36 each 5-year life $100 per year to keep charged Expected salvage = $5 Straight-line depreciation Income Statement year Revenue Costs Depreciation old new Taxes OCF 0 1 12 0 4.8 7.2 12 2.45 9.55 2 12 0 4.8 7.2 12 2.45 9.55 Long-lasting Batteries Initial Cost = $60 each 5-year life $88 per year to keep charged Expected salvage = $5 Straight-line depreciation 3 12 0 4.8 7.2 12 2.45 9.55 4 12 0 4.8 7.2 12 2.45 9.55 4 9.55 0 0 5 12 0 4.8 7.2 12 2.45 9.55 5 9.55 0 0 0 0 0 9.55 4.75 tax rate discount rate year 0 1 2 3 OCF 9.55 9.55 9.55 chang(NWC) 0 0 0 0 NCS -24 0 0 0 salvage tax on salvage after-tax salvage CFFA -24 9.55 9.55 9.55 PV(CFFA) -24 8.31 7.22 6.28 NPV 8.02 NPV $8.02 (using the Excel formula) 9.55 5.46 discount rate 0.34 0.15 ...
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This note was uploaded on 04/09/2008 for the course BA 3341 taught by Professor Polkovnichenko during the Spring '08 term at University of Texas at Dallas, Richardson.

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