# HOMEWORK CORFIN CHAPTER 10 .docx - KELOMPOK 2: Claudia...

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KELOMPOK 2:Claudia Jessica Tunadi - 01012190050Chelsy Cyndy Limpele - 01012180140Claracia Memey Haribae - 01012190060Mareta Marthio - 01012190088Silphianie - 01012190068Vallerie Audrey - 01012180089William Sunsalim - 010121900773.Sales\$ 830.000Variable Costs498.000\$ 332.000Fixed Cost181.000Depreciation77.000EBIT74.000Taxes (35%)25.900NET INCOME\$ 48.1004.Sales\$ 824.500Costs538.900Depreciation126.500EBIT159.100
Taxes (34%)54.094Net Income\$ 105.006Operating Cash Flows := EBIT – Taxes + Depreciation= \$ 159.100 - \$54.094 + \$ 126.500= \$ 231.506Depreciation Tax Shield := Depreciation Expense x Tax Rate= \$ 126.500 x 34% =\$ 43.010Operating Cash Flows Using Tax Shield Approach := (Sales – Costs) x (1 – T) + Depreciation x T= ( \$ 824.500 - \$ 538.900) x (1-0,34) + \$ 126.500 x 0,34= \$ 188.496 + \$ 43.010 =\$ 231.5065. Basic approachCF = EBIT - taxes + depreciation= 50200 - 17570 + 6800= 39430Top down approachCF = Sales - cost - taxes= 108000 - 51000 - 17570= 39430Tax shield approachCF = (sales - cost) x (1 - tax rate) + depreciation x tax rate= (108000 - 51000) x (1-35%) + 6800 x 35%= 39430Bottom up approachCF = Net income + depreciation= 32630 + 6800
= 394309.Sales\$ 2,650,000Cost\$840,000Depreciation\$ 1,300,000[\$ 3,900,000 ÷ 3]EBIT\$510,000Taxes (35%)\$178,500Net income\$331,500EBIT\$510,000-Taxes\$178,500+Depreciation\$ 1,300,000OFC\$ 1,631,50010.13.15.16.19. Geary Machine ShopDepreciation:D1 = \$560,000(0.2000) = \$112,000D2 = \$560,000(0.3200) = \$179,200D3 = \$560,000(0.1920) = \$107,520D4 = \$560,000(0.1152) = \$64,512The book value at the end of the project:BV = \$560,000 – (\$112,000 + 179,200 + 107,520 + 64,512) = \$96,768
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Generally Accepted Accounting Principles, Claudia Jessica Tunadi, Cyndy Limpele, Memey Haribae, Mareta Marthio

Unformatted text preview: The asset is sold at a loss to book value, so this creates a tax refund. After-tax salvage value = \$80,000 + (\$96,768 – 80,000)(0.35) = \$85,868.8So, the OCF for each year will be: OCF1 = \$210,000(1 – 0.35) + 0.35(\$112,000) = \$172,700 OCF2 = \$210,000(1 – 0.35) + 0.35(\$179,200) = \$196,220 OCF3 = \$210,000(1 – 0.35) + 0.35(\$107,520) = \$171,132 OCF4 = \$210,000(1 – 0.35) + 0.35(\$64,512) = \$159,079.20 NPV = – \$560,000 – 20,000 + (\$172,700 – 3,000)/1.09 + (\$196,220 – 3,000)/1.092 + (\$171,132 – 3,000)/1.093 + (\$159,079.20 + 29,000 + 85,868.80)/1.094 = \$69,811.79Yes, the company should buy and install the machine press. 20. Dik .System A: Costs \$430,000n = 4 years \$110,000 in Pretax Annual Operating Costs. System B: Costs \$570,000 n = 6 years \$98,000 in Pretax Annual Operating CostsTax Rate 34%, Disc Rates 11% Depreciation use straight line method Dit. Which Project should firm choose! Ans: To decide between two projects should be chosen, we’ll use capital budgeting method to use is NPV. OCF = (Sales – Costs) x (1-tax) + Depreciation x Tax NPV = Costs – OCF NPV of Project A: OCFA = –\$110,000(1 – 0.34) + 0.34(\$430,000/4) OCFA = –\$36,050 NPVA = –\$430,000 – \$36,050(PVIFA11%,4) NPVA = –\$541,843.17 NPV of Project B: OCFB = –\$98,000(1 – 0.34) + 0.34(\$570,000/6) OCFB = –\$32,380 NPVB = –\$570,000 – \$32,380(PVIFA11%,6) NPVB = –\$706,984.82From calculation above, Dangerfield Industrial System should choose project A, because it has the more positive NPV....
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