Chapter 10

Chapter 10 - Problem #4 Tax % a. Sales Costs Depreciation...

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Problem #4 Tax % 35% a. Sales $602,184 Costs $391,776 Depreciation $89,100 EBIT $121,308 Taxes $42,458 Net Income $78,850 b. OFC $167,950 EBIT+Depreciation-Taxes c. Depreciation tax shield $31,185 Depreciation times the tax rate
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Problem #8 Acquisition Cost $15,996,000 MACRS Table Sale Price $3,612,000 Year Three-Year Five-Year Tax Rate 33% 1 33.33% 20.00% Project Years 4 2 44.44% 32.00% $2,764,108.80 3 14.82% 19.20% 4 7.41% 11.52% 5 11.52% Aftertax Salvage Value $3,332,195.90 6 57.6% 7 8 Book Value 5
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Seven-Year 14.29% 24.49% 17.49% 12.49% 89.3% 89.3% 89.3% 44.5%
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Problem #13 Installed Cost $195,000 Scrap Value $30,000 Pretax Operating Costs $60,000 Initial Investment in NWC $14,000 Tax Rate 31% Discount Rate 11% Years 8 Annual Depreciation $24,375 Aftertax Salvage Value $20,700 OCF $48,956 PVIFA 5.15 NPV $57,992.12
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Problem #19 MACRS Table 5 Years 4 MACRS Table Cost New $201,600 $530,000 Year Three-Year Five-Year Seven-Year Annual pretax cost savings $67,200 $205,000 1 33.33% 20.00% 14.29%
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Chapter 10 - Problem #4 Tax % a. Sales Costs Depreciation...

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