Example_L04(1)

Example_L04(1) - 50,000 Discount Rate 8% MACRS Depreciation...

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Initial Cost Savings Tax Rate Expected Salvage Discount Rate MACRS Depreciation Schedule Year Percentage Depreciation Expense Year Operating Cash Flow Net Capital Spending Changes in NWC Cash Flow from Assets -1000000 Net Present Value Internal Rate of Return Depreciation Expense Operating Cash Flow After-tax Salvage
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1000000 300000 0.4 50000 0.08 1 33.33% 333300 1 313,320 0 313,320 83,797.4960740912 11% = initial cost * percentage =(sales - costs)*(1 - tax rate) + depreciation*tax rate note that sales = 0 and a cost savings is -costs =salvage - tax rate(salvage - book value)
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2 3 4 Book value 44.45% 14.81% 7.41% 444500 148100 74100 0 2 3 4 5 357,800 239,240 209,640 180000 0 0 0 30000 0 0 0 0 357,800 239,240 209,640 210,000
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year 5
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Initial Cost 1,000,000 Savings 300,000 Tax Rate 40% Expected Salvage
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Unformatted text preview: 50,000 Discount Rate 8% MACRS Depreciation Schedule Year 1 2 Percentage 33.33% 44.45% Depreciation Expense 333,300 444,500 Year 1 Operating Cash Flow 313,320 Net Capital Spending-1,000,000 Changes in NWC Cash Flow from Assets-1,000,000 313,320 Net Present Value $83,797.50 Internal Rate of Return 11.45% Depreciation Expense = initial cost * percentage Operating Cash Flow =(sales - costs)*(1 - tax rat note that sales = 0 and a c 3 4 14.81% 7.41% 148,100 74,100 2 3 4 5 357,800 239,240 209,640 180,000 30,000 357,800 239,240 209,640 210,000 te) + depreciation*tax rate cost savings is -costs Book Value year 5...
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Example_L04(1) - 50,000 Discount Rate 8% MACRS Depreciation...

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