Unformatted text preview: Rounded Depreciation Percentages by Recovery Year
— ~ , . Using MACRS for First Four Property Classes Percentage by recovery year“ I Recovery Year 7 3 3":ars 5 Years ' 7years » 10 Years
1 33% 20%  14°/_o . 10%
2' 45 ' 32 ' 255“ is 1’:
3 '15 , i 19 . 13’ ,14 ”if
'4 .751; 1~ '1312' ,12 712V
‘57 ' T‘ "'"127‘ i' 9 59':
7X 97 7 j
s'_ ' '41. " 6 '
V 9; " _'.6"
10 , '6 ,
. .11 i _, 7, g  i .__ ,. _ J .
iiiTotals gin C ‘ ' 100% 10_0% _o_0% '5' ll 3 “These percentages have been rounded to the nearest whole percent to Simplify calculations while retaining
‘ ' V realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded I i percentages or directlyapply double—declining balance (200%) depreciation using the halfyear conventions TAB LE 8.2 The Basic Format for Determining nitial' Investment Installed cost of ne ‘ asset + Install ion costs
Aftertax proceeds from sale of old asset Proceeds from sale of lid asset '$Tax on sale of old
“Change” in net working capital Note: I0 is the same as Initial Investment (L1). N?__y_. mix: Wig (aims2Q;
~ cg _ .
NPV=Za+ky [0 J) 130v“ “'5 TABLE 8.7 Calculation of Operating Cash Inflows bUsing the Income Statement Format Revenue — Expenses (excluding depreciation and interest) Earnings before depreciation, interest, and taxes (EBDIT) , Depreciation Earnings before interest and taxes .(EBIT)
— Taxes (rate— — T) Net operating profit after taxes [NOPAT= EBIT X (1 — T)]
+ Depreciation ‘Operating cashﬂinﬂows (samefas OCF in Equation 3.4) ’ TABLEg 8.10 The Basic Format for Determining
Terminal Cash Flow Aftertax proceeds from sale of new asset = Proceeds from sale of new asset . CF .r Tax on sale of new asset
PI = Z ’ (l. + k), +Io — After— tax proceeds from sale of old asset:
ri Proceeds from sale of old asset
) 3 Tax on sale of old asset
IRR: ' $' Change in net working capital
1 _ SR‘ CF; Terminal cash flow
° 2: (1 +£27.12 )' Paybacknnnuity = I0 / CFt ...
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 Spring '12
 JohnZietlow
 Finance

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