Problem 11-02.xls

# Problem 11-02.xls - Capital Budgeting 1 2 3 4 5 6 7 8 9 10...

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Capital Budgeting Problem 11-2 Single-Year Inputs New asset price \$200,000 Ship. & install. Old salvage, t = 0 Life, n ≤ 20 8 Discount rate 14.00% Tax rate 40.00% CCA rate 30.00% New salvage, t = n Old salvage, t = n Multi-Year Inputs Year 0 1 2 3 4 5 6 7 8 9 ∆NOWC New revenues \$90,000 \$90,000 \$90,000 \$90,000 \$90,000 \$90,000 \$90,000 \$90,000 Old revenues New operating costs \$40,000 \$40,000 \$40,000 \$40,000 \$40,000 \$40,000 \$40,000 \$40,000 Old operating costs CCA Schedule Output Year 0 1 2 3 4 5 6 7 8 9 Starting UCC \$0 \$200,000 \$170,000 \$119,000 \$83,300 \$58,310 \$40,817 \$28,572 \$20,000 \$14,000 CCA \$0 \$30,000 \$51,000 \$35,700 \$24,990 \$17,493 \$12,245 \$8,572 \$6,000 \$4,200 Ending UCC \$0 \$170,000 \$119,000 \$83,300 \$58,310 \$40,817 \$28,572 \$20,000 \$14,000 \$9,800 Cash-Flow Outputs Year 0 1 2 3 4 5 6 7 8 9 ∆Revenues \$0 \$90,000 \$90,000 \$90,000 \$90,000 \$90,000 \$90,000 \$90,000 \$90,000 \$0 \$0 \$40,000 \$40,000 \$40,000 \$40,000 \$40,000 \$40,000 \$40,000 \$40,000 \$0 ∆Net revenues \$0 \$50,000 \$50,000 \$50,000 \$50,000 \$50,000 \$50,000 \$50,000 \$50,000 \$0 \$0 \$20,000 \$20,000 \$20,000 \$20,000 \$20,000 \$20,000 \$20,000 \$20,000 \$0 ∆A-T net revenues \$0 \$30,000 \$30,000 \$30,000 \$30,000 \$30,000 \$30,000 \$30,000 \$30,000 \$0 ∆CCA tax shield \$0 \$12,000 \$20,400 \$14,280 \$9,996 \$6,997 \$4,898 \$3,429 \$2,400

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