E 355-Spring18-HW5-Sol.pdf - 5.1 Ambarella Inc wants to...

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E 355-Spring18-HW5-Sol (2).xlsx 3/21/18 5.1 1 $265,500 2 $175,000 3 $99,000 4 $135,000 5 $390,000 6 $99,000 7 2 8 $135,000 9 $28,500 10 $365,000 11 5% 12 2 13 18% 14 $0 15 $70,000 16 9% NOTE: All units are in thousand dollars This system qualifies as a special 2-year MACRS Depreciation (with factors 0.58 and 0.42). Assume that the working capital is returned in year 2. Assume that the company has income from other projects and this system is sold at the end of year 2. a) Calculate the interest and principal repayments for the loan. [2 point] A =P (A/P, i,n) =365000(A/P , 5% , 2) = $196,299 Year Beginning Balance Ann. Payment Interest Principal Repayament Ending Balance 1 365000 196299 18250 178049 186951 2 186951 196299 9348 186951 0 Total 27598 365000 b) Find the depreciation expenses and accumulated depreciation expenses (using the special MACRS rate) for this system. [2 point] Yr. Initial Cost Depr. Rates Dep. Exp Accum. Dep Ending BV 0 $265,500 1 58% $153,990 $153,990 $111,510 2 42% $111,510 $265,500 $0 Total 100% $265,500 c) Calculate the after-tax cash flows from salvage of depreciable and non-depreciable capital. [2 points] After Tax Cash Flows from salvage of Taxes = (FMV - BV) (TR) Depreciable Capital: = ( $175,000 - $0 ) * ( 18% ) = $31,500 After Tax Cash Flows =
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