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Revised_Final_Exam_Formulas_Sheet

# Revised_Final_Exam_Formulas_Sheet - Rounded Depreciation...

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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 9-7 7 j s'_ ' '41. " 6 ' V 9; " _'.6" 10 , '6 , . .11 i _, 7, g - i ._-_ ,. _ J- -. iii-Totals 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 half-year conventions TAB LE 8.2 The Basic Format for Determining nitial' Investment Installed cost of ne ‘ asset + Install ion costs After-tax 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 (aims-2Q; ~ 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) ’ TABLE-g 8.10 The Basic Format for Determining Terminal Cash Flow After-tax 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: r-i 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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