eoc_chapter_09

eoc_chapter_09 - Chapter 9 Problems 1-25 Input boxes in tan...

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Chapter 9 Problems 1-25 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green

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Chapter 9 Question 1 Input area: Purchase price \$6,000,000 Appraised value 6,800,000 Cost to build 10,000,000 Grading costs 500,000 Output area: The acquisition cost is a sunk cost. The appraisal value is an opportunity cost and should be included. The cost to build and grading costs are investments in fixed assets and are included. Total initial cost = \$17,300,000
Chapter 9 Question 2 Input area: Camper quantity 12,000 Camper price \$15,000 Increased motor home quantity 2,000 Motor home price \$50,000 Lost motor coach quantity 1,000 Motor coach price \$90,000 Output area: Camper sales \$180,000,000 Increased motor home sales 100,000,000 Lost motor coach sales (90,000,000) Total sales \$190,000,000

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Chapter 9 Question 3 Input area: Sales \$800,000 Variable cost percent 60% Fixed costs 190,000 Interest expense 95,000 Tax rate 35% Output area: Income Statement Sales \$800,000 Costs 480,000 Fixed costs 190,000 Depreciation expense 95,000 EBIT \$35,000 Taxes 12,250 Net income \$22,750
Chapter 9 Question 4 Input area: Sales \$612,800 Costs 321,680 Depreciation Expense 105,000 Tax rate 35% Output area: Income Statement Sales \$612,800 Costs 321,680 Depreciation Expense: 105,000 EBIT \$186,120 Taxes 65,142 Net Income \$120,978 Operating cash flow = EBIT + Depreciation - Taxes = \$225,978.00 Depreciation tax shield = Depreciation * Tax rate = \$36,750.00

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Chapter 9 Question 5 Input area: Cost \$861,000.00 Output area: Year Dep. % 1 \$861,000.00 14.29% \$123,036.90 \$737,963.10 2 737,963.10 24.49% 210,858.90 527,104.20 3 527,104.20 17.49% 150,588.90 376,515.30 4 376,515.30 12.49% 107,538.90 268,976.40 5 268,976.40 8.93% 76,887.30 192,089.10 6 192,089.10 8.93% 76,887.30 115,201.80 7 115,201.80 8.93% 76,887.30 38,314.50 8 38,314.50 4.45% 38,314.50 - Beginning Book Value Depreciation Allowance Ending Book Value
Chapter 9 Question 6 Input area: Asset price \$520,000.00 Asset life 8 Years asset used 5 Market Value 125,000.00 Tax rate 35.00% Output area: Ending book value = \$195,000.00 Aftertax salvage = \$149,500.00

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Chapter 9 Question 7 Input area: Cost \$6,400,000 Salvage price 1,500,000 Tax rate 34% Output area: Year Dep. % 1 \$6,400,000.00 20.00% \$1,280,000.00 \$5,120,000.00 2 5,120,000.00 32.00% 2,048,000.00 3,072,000.00 3 3,072,000.00 19.20% 1,228,800.00 1,843,200.00 4 1,843,200.00 11.52% 737,280.00 1,105,920.00 Aftertax salvage value = \$1,366,012.80 Beginning Book Value Depreciation Allowance Ending Book Value

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Chapter 9 Question 8 Input area: Sales \$116,400 Costs \$45,400 Beginning Ending Accounts receivable \$49,760 \$43,040 Inventory \$8,540 \$13,024 Accounts payable \$81,360 \$89,080 Output area: Accounts receivables changed by \$(6,720) Inventory changed by \$4,484 Net current assets changed by \$(2,236) Change NWC \$(9,956) Net cash flow \$80,956
Chapter 9 Question 9 Input area: Asset investment \$1,800,000 Estimated annual sales \$1,920,000 Costs \$985,000 Tax rate 35% *Depreciation straight-line to zero over tax life 3 Output area: OCF \$817,750

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This note was uploaded on 05/01/2009 for the course FINC 106 taught by Professor Dr.nehale during the Spring '09 term at Baptist College of Health Sciences.

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eoc_chapter_09 - Chapter 9 Problems 1-25 Input boxes in tan...

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