Proj 3 Case 3 - Year 1 2 3 4 5 Original Value Current...

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Profits Before Depreciation and Taxes Year Ship A Ship B 1 $21,000,000.00 $22,000,000.00 2 $21,000,000.00 $24,000,000.00 3 $21,000,000.00 $26,000,000.00 4 $21,000,000.00 $26,000,000.00 5 $21,000,000.00 $26,000,000.00 Original Value Current Purch. Price $40,000,000.00 $54,000,000.00 Value in 5 Years $12,000,000.00 $20,000,000.00 Salvage Value $18,000,000.00 Book Value $9,280,000.00 a) Initial Outlay Ship A Ship B New $(40,000,000.00) $(54,000,000.00) Price to outfit $(8,000,000.00) $(6,000,000.00) Existing Ship Sale $18,000,000.00 $18,000,000.00 Existing Ship Tax $3,488,000.00 $3,488,000.00 NWC $4,000,000.00 $6,000,000.00 INITIAL OUTLAY $(37,488,000.00) $(51,488,000.00) b) Operating Cash Flows SHIP A 1 2 Increase in Revenue $7,000,000.00 $7,000,000.00 Increase in Expenses 0 0 Increase in Depreciation Difference $5,760,000.00 $11,840,000.00 EBT $1,240,000.00 $(4,840,000.00) Tax $496,000.00 $(1,936,000.00) Net Income $744,000.00 $(2,904,000.00) Increase in Depreciation Difference $5,760,000.00
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Proj 3 Case 3 - Year 1 2 3 4 5 Original Value Current...

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