Capital Budgeting7

Capital Budgeting7 - Year 0 1 MACRS Rates for New Machine 2...

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Old Exam Questions - Capital Budgeting Page 42 of 55 Pages Year 0 1 2 3 4 5 MACRS Rates for New Machine 0.33 0.45 0.15 0.07 0.00 New Depreciation Less: Old Depreciation -$20,000.00 -$20,000.00 $0.00 $0.00 $0.00 Net Depreciation Original Cost -$125,000.00 Freight & Installation -$15,000.00 Depreciable Basis -$140,000.00 NOWC -$20,000.00 Recapture of NOWC Revenues $50,000.00 $80,000.00 $60,000.00 $50,000.00 $50,000.00 Less: Operating Costs Less: Net Depreciation EBIT Taxes (40%) Net Income Plus: Net Depreciation Operating Cash Flow Old Salavage Value $50,000.00 Taxes on Old Salvage Value Net Salvage Value - Old New Salvage Value $30,000.00 Taxes on New Salvage Value Net Salvage Value - New Free Cash Flow PV Free Cash Flow NPV IRR YOU ARE GIVEN THE FOLLOWING INFORMATION FOR PROBLEMS 66 - 67: Year Project A Project B 0 -$5,000.00 -$4,000.00 1 $6,000.00 $2,000.00 2 $5,000.00 $2,000.00 3 $3,000.00 $4,000.00 4 -$1,000.00 $4,000.00 5 $1,000.00 $3,000.00 66. Assume that the risk-free rate is 6 percent, the return on the market is 11.0 percent, and that Project A has a beta of 1.20. Given this information, determine the net present value (NPV) of Project A. A. $5,410.36 B. $8,410.36 C. $6,410.36
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Old Exam Questions - Capital Budgeting Page 43 of 55 Pages D. $7,410.36 E. $9,410.36 67. Assume that the risk-free rate is 6 percent, the return on the market is 11.0 percent, and that Project B has a beta of 1.40. Given this information, determine the internal
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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Capital Budgeting7 - Year 0 1 MACRS Rates for New Machine 2...

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