# Hw5 - the marketplace is 4 per year compounded quarterly 3 A new welding machine costs \$22,000 It has a useful life of 8 year It is expected to

This preview shows page 1. Sign up to view the full content.

CE 167: Engineering Project Management HO21 1 Payback, Bonds, and Taxes Assignment 5 HO: Thursday February 21, 2008 DUE: Thursday February 28, 2008 1. An asset has the following cash flow: Year 0 1 2 3 4 5 6 7 8 Amount - \$180 - \$90 0 \$100 \$100 \$100 - \$90 \$100 \$100 a. Calculate the payback period without discounting. b. Calculate the payback period with discounting. Use i = 5%. 2. A municipality is issuing mortgage bonds with a 20-year maturity, that have a total face value of \$10 million. The bond interest rate is 6% per year, payable quarterly. If brokerage fees and marketing costs are estimated to amount to \$250,000, what might the municipality expect to receive (expressed in present worth) from all bond purchasers, if the interest rate in
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: the marketplace is 4% per year, compounded quarterly? 3. A new welding machine costs \$22,000. It has a useful life of 8 year. It is expected to produce gross earnings of \$6,000 each year and then have a salvage value of \$4,000. Assume that the steel erector who is considering this purchase expects to pay a 40% tax rate and estimates its MARR at 8%. Is this machine worth buying? Use MACRS to calculate depreciation. When drawing a cash flow diagram, show depreciation charges in a different color or using a dashed line. Calculate the taxes you will have to pay each year. Draw a separate after-tax cash flow diagram....
View Full Document

## This note was uploaded on 02/27/2011 for the course CE 167 taught by Professor Horvath during the Fall '08 term at University of California, Berkeley.

Ask a homework question - tutors are online