Corporate Finance Final Crib Sheet

# Corporate Finance Final Crib Sheet - -Newly purchased...

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Unformatted text preview: -Newly purchased industrial eqpt costs \$847,000 and 7- year property under MACRS. After 5 yrs, eqpt will be sold for \$80,000. Annual depreciation allowances and end-of- the-year book values over the 5 yrs that this eqpt will be used? After-tax salvage value T=34%? Yr Begin bv MACRS Depr End b v 1 \$847,000 0.1429 \$121,036.3 \$725,963.7 2 725,963.7 0.2449 207,430.3 518,533.4 3 518,533.4 0.1749 148,140.3 370,393.1 4 370,393.1 0.1249 105,790.3 264,602.8 5 264,602.8 0.0893 75,637.1 188,965.7 ATSV = (1-T) x BTSV +T x EndBV =117,048.30-Considering a new 3yr expansion prjt, initial fixed asset invest of \$2.7 mill. The fixed asset depr. strt-line to 0 over its 3 yr tax life. The prjt is estimated to generate \$2.4 mill in annual sales, costs of \$.96 mill. No changes in NWC needs associated with the project. OCF for project w T=35%? NPV w disc rate 12%? OCF = (1-T) x (Sales - Costs) + T x Depr = .65 x 1,440,000 + .35 x 900,000= 1,251,000 0 1 2 3 OCF 1251000 1251000 1251000 NCS -2700000 0 0 ChNWC----- --------------------------------------- CFFA -2700000 1251000 1251000 1251000 NPV = \$304,690.92-A 5-yr prjct initial fixed asset investment of \$210k, an initial NWC invest of \$20k, and an annual OCF of -\$32k. The fixed asset is fully depr over the life of the project and has no salvage value. NWC recovered at end. Req ret is 15%, what is equivalent annual cost (EAC)? 0 1 2 3 4 5 OCF -32k -32k -32k -32k -32k NCS -210k ChNWC -20k 20k ==================================== CFFA -230k -32k -32k -32k -32k -12k NPV = -327,325.43 n=5, r=.15, pv=-327,325.43, FV=0 pmt=?=97646.27= EAC-150,000 cartons of screws per yr over the next 5 yrs. It will cost \$780k to install the eqpt to start projt; depr cost strt-line to 0 over the project's life. In 5 yrs, this eqpt salvaged for \$50k. Fixed production costs will be \$240k/ yr, VCosts should be \$8.50/carton. Initial investment in net working capital of \$75k (recovered at the end). T=35% and require 16% ret on your invest. What bid price? ATSV = .65 x 50000 = 32,500 0 1 2 3 4 5 OCF ? ? ? ? ? NCS -780000 32,500 ChNWC -75000 75,000 ==================================== CFFA -855k ? ? ? ? ?+107.5k OCF B/E- n=5 PV=-855k I=16 FV=107.5k pmt=? =ocf=245,493.51 OCF = (Sales - Costs) x (1 - T) + Depr x T Depr= 780,000 / 5 = 156,000 Costs=FC+VCxQ=240k+8.5x150k=1,515k Sales=(OCF-DeprxT+Costsx(1-T) )/(1-T)= 1,808,682 Or, 1,808,682 / 150,000 = 12.06 per box.-Projt following estimated data: price= \$70/unit; VC=\$37/unit; fixed costs =\$6k; req ret= 15%; initial invest= \$12k; life= 4 yr. Use strt-line depr over 4yr, and the projt no salvage value. T=34%. What is the accounting B/E quantity? The cash B/E quantity (ignoring the depr T shield)? The financial B/E quantity?...
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## This note was uploaded on 10/05/2008 for the course FNCE 3010 taught by Professor Donchez,ro during the Fall '07 term at Colorado.

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Corporate Finance Final Crib Sheet - -Newly purchased...

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