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XYZ - XYZ Corporation Inflation = Capital Expenditures...

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XYZ Corporation Inflation = 7% 0 1 2 3 4 5 6 Capital Expenditures -14000 3000 Revenues 5000 5350 5724.50 6125.22 6125.22 6125.22 Expenses 2000 2140 2289.80 2450.09 2450.09 2450.09 Depreciation 2,200 3,520 2,090 1,210 1,210 660 Gross Profit 800 -310 1344.70 2465.13 2465.13 3015.13 Taxes 280 -108.5 470.65 862.80 862.80 1055.30 Net Income 520 -201.5 874.06 1602.33 1602.33 1959.83 Add back Depreciation 2720 3318.5 2964.06 2812.33 2812.33 2619.83 Working Capital -50 50.00 Net Cash Flows -14050 2720 3318.5 2964.06 2812.33 2812.33 5669.83 NPV $259.80 Market value = book value, so no tax implications of sale Depreciation % 1 0.2 $2,200.00 2 0.32 $3,520.00 3 0.19 $2,090.00 4 0.11 $1,210.00 5 0.11 $1,210.00 6 0.06 $660.00 8 9 Johnson Inc. 0 1 2 3 4 5 6 7 Land -400000 751815 796924 Capital Expenditures -2500000 375908 398462 Revenue 500000 530000 561800 595508 631238 669113 709260 100000 100000 Expense 250000 265000 280900 297754 315619 334556 354630 275908 298462 Depreciation 100000 100000 100000 100000 100000 100000 100000 126917 137293 Gross Profit 150000 165000 180900 197754 215619 234556 254630 148990 161169
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Taxes 69000 75900 83214 90967 99185 107896 117130 248990 261169 Net Income 81000 89100 97686 106787 116434 126660 137500 248990 261169 Add back depreciation 181000 189100 197686 206787 216434 226660 237500 0.4665 0.4241 Net Cash Flow -2900000 181000 189100 197686 206787 216434 226660 237500 116154 110762 Discount factor 1.0000 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 Present Value -2900000 164547 156272 148521 141236 134384 127950 121885 NPV -733496 Depreciation = (2500000-500000)/20 = 100000 Klang Audio Systems Depreciation on prufung = 42,000/7 = $6,000/year Depreciation on showroom = (100,000-60,000)/10 = $4,000/year 7 8 30,000 30,000 0 1 2 3 4 5 6 10,000 4,000 Profits 30,000 30,000 30,000 30,000 30,000 30,000 20,000 26,000 Depreciation 10,000
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