Answers Homework 3

Answers Homework 3 - Chapter 7 Problems 1-40 Input boxes in...

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Unformatted text preview: Chapter 7 Problems 1-40 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-in" be installed in Excel. To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak and "Solver Add-In." k" Chapter 7 Question 1 Input area: Initial investment $10,000 *Depreciation straight-line over life 5 Units sold 2,000 Cost per unit $2 Price per unit $5 Tax rate 34% Required return 17% Output area: Sales $10,000 Costs 4,000 Depreciation 2,000 EBT $4,000 Tax 1,360 Net income $2,640 OCF $4,640 NPV $4,844.97 Chapter 7 Question 2 Input area: Year 0 Year 1 Year 2 Year 3 Year 4 Investment $10,000 - - - Sales revenue- $7,000 $7,000 $7,000 $7,000 Operating costs- 2,000 2,000 2,000 2,000 Depreciation- 2,500 2,500 2,500 2,500 Net working capital 200 250 300 200 ? Tax rate 34% Required return 12% Output area: Sales $7,000 $7,000 $7,000 $7,000 Costs 2,000 2,000 2,000 2,000 Depreciation 2,500 2,500 2,500 2,500 EBT $2,500 $2,500 $2,500 $2,500 Tax 850 850 850 850 Net income $1,650 $1,650 $1,650 $1,650 OCF- $4,150 $4,150 $4,150 $4,150 Capital spending $(10,000)- - - - NWC (200) (250) (300) (200) 950 Incremental cash flow $(10,200) $3,900 $3,850 $3,950 $5,100 NPV $2,404.01 Chapter 7 Question 3 Input area: Asset investment $2,700,000 Estimated annual sales $2,400,000 Costs $960,000 Tax rate 35% *Depreciation straight-line to zero over tax life 3 Required return 15% Output area: OCF $1,251,000.00 NPV $156,314.62 Chapter 7 Question 4 Input area: Asset investment $2,700,000 Estimated annual sales $2,400,000 Costs $960,000 Tax rate 35% Required return 15% *Depreciation straight-line to zero over tax life 3 OCF $1,251,000 Initial investment in NWC $300,000 Fixed asset value at end $210,000 Output area: Year Cash flow $(3,000,000) 1 $1,251,000 2 $1,251,000 3 $1,687,500 NPV $143,320.46 Chapter 7 Question 5 Input area: Asset investment $2,700,000 Estimated annual sales $2,400,000 Costs $960,000 Tax rate 35% Required return 15% Initial investment in NWC $300,000 Fixed asset value at end $210,000 *3 yr MACRS 0.3330 0.4440 0.1480 Output area: Year Depreciation Cash flow $(3,000,000.00) 1 $899,100.00 $1,250,685.00 2 $1,198,800.00 $1,355,580.00 3 $399,600.00 $1,583,235.00 Book value $202,500 Aftertax salvage value $207,375 NPV $153,568.12 Chapter 7 Question 6 Input area: Initial investment $925,000 Pretax salvage value $90,000 Cost savings per year $360,000 Working capital reduction $(125,000) Tax rate 35% *Depreciation straight-line over life 5 Output area: Annual depreciation charge $185,000 Aftertax salvage value $58,500 OCF $298,750 Year Cash flow $(800,000) 1 $298,750 2 $298,750 3 $298,750 4 $298,750 5 $232,250 IRR 23.85% Chapter 7 Question 7 Input area: Installation cost $390,000 Operating cost per year $120,000 Initial NWC $28,000 Pretax salvage value $60,000 Tax rate 34% Discount rate 10% *Depreciation straight-line over life 5...
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Answers Homework 3 - Chapter 7 Problems 1-40 Input boxes in...

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