Corporate Finance Final Crib Sheet

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

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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?...
View Full Document

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.

Page1 / 3

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

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online