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

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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
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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....
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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.

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