HW6 Soln 10 corrected

HW6 Soln 10 corrected - ENG 106 Homework#6 Solution Winter...

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ENG 106 Homework #6 Solution Winter 2010 Problem 9.34 All dollar values in k$ Assumptions for Both Alternatives Marginal tax rate, % 40% MARR, %/year 15% Inflation rate, %/year 0 A) Buy Option Inputs/Assumptions (all dollar amounts in year 0$) Equip Purchase, $ 120 Loan principal borrowed, $ 120 Loan Interest Rate, per year 10% Loan term, years 4 Annual revenue, $/year 0 (really 200k but ignored since common to both alternatives) Annual op. costs, $/year 40 Annual maint cost, $/year 10 Equip [email protected], $ 20 Tax Year: 1234 MACRS 5-yr Deprec %* 20.00% 32.00% 19.20% 5.76% *only a half year of deprec in year 4 since sold in that year Calculations (amounts in actual $, except for book value and depreciation which are not cash flows) E O Y 01234 Revenue, Rn 0.0 0.0 0.0 0.0 Operating + Maint Expenses, En -50.0 -50.0 -50.0 -50.0 Interest Expense, In -12.0 -9.4 -6.6 -3.4 =IPMT(loan i,yr,term,amt brwd) Depreciation, Dn -24.0 -38.4 -23.0 -6.9 =cost base*deprec% for year n TI 0.0 -86.0 -97.8 -79.6 -60.4 = sum(Rn,On,In,Dn) Tax 0.0 34.4 39.1 31.8 24.1 = TI*marginal tax rate Net Income 0.0 -51.6 -58.7 -47.8 -36.2 = sum(TI, Tax) Depreciation, Dn 24.0 38.4 23.0 6.9 Cash Flow from Ops, CFFOn 0.0 -27.6 -20.3 -24.7 -29.3 = sum(Net Income, Dn) Asset Purchase, Pn -120.0
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This note was uploaded on 04/09/2010 for the course ENGR ENG106 taught by Professor Hartsrough during the Winter '10 term at UC Davis.

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HW6 Soln 10 corrected - ENG 106 Homework#6 Solution Winter...

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