FI515_Homework5_ - -$22,000 $25,861 = $3,861 IRR = 17.99...

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10-8 IRR TRUCK press CF, enter -17100 for CF0, 5100 CO1-C05 1 for FO1-F05 IRR 14.99 or 15% rounded Pulley press CF, enter -22430 CF0, 7500 CO1-C05 1 for FO1-F05 IRR 19.99 NPV Truck=- 17100+(5100/1.14^1)+(5100/1.14^2)+(5100/1.14^3)+(5100+1.14^4)+(5100/1.14^5) = -17100+17509 = $409 Pulley=- 22430+(7500/1.14^1)+(7500/1.14^2)+(7500/1.14^3)+(7500+1.14^4)+(7500/1.14^5) =-22430+25748 = $3318 MIRR Truck FV= -17508.71 n=5, I/Y=14 FV is 33711.53 N=5 FV=33711.53 I/Y is 14.54% Pulley FV= -25748.11 n=5 I/Y=14 FV is 49,575.79 N=5 FV=49575.79 I/Y = 17.19% rounded
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Since these projects are independent of each other they both should be accepted. 10-9 NPV Electric: -$22,000 + $6,290(4.1114) = -$22,000
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Unformatted text preview: -$22,000 + $25,861 = $3,861 IRR = 17.99% Gas: -$17,500 + $5,000(4.1114) = -$17,500-$17,500 + $20,557 = $3,057 IRR = 17.97% The company should purchase the electric 11-2 Before tax operating cash flow 1,000,000 Tax Rate 40% 1,000,000*.40=400,000 1,000,000-400,000=600,000 Operating profit = 600,000 Depreciation 2,000,000 2,000,000+600,000 = 2,600,000 (or $2.6 million) 11-3 Purchase price: 20,000,000 Depreciation 16,000,000 Book Value 4,000,000 Sale Price 5,000,000 5,000,000-4,000,000=1,000,000 Gain From sale: 1,000,000 Tax Expense 400,000 Net Gain 600,000 Book Value 4,000,000 Net Gain 600,000 4,600,000...
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