7) EmKay, Inc. is considering an investment in a new production equipment to boost its revenue. For this new investment, the following data apply: Purchase price = $900,000 $360,000 from company funds and $540,000 from a loan} Useful Life: 4 years Depreciation: MACRS-GDS 3-year property Effective tax rate: 35% Estimated salvage: $90,000 Estimated annual O&M costs: $48,000 Estimated new annual revenue: $360,000 Conditions on loan: Nominal annual rate of 5% per year compounded annually. The loan is to be repaid over 3 years with equal annual payments. a) Loan calculations - principal and interest payments. (Round off values to the nearest dollar) b)' O EOY BT&LCF Loan 1 2 3 Find the ATCF for each year of this investment (Round off values to the nearest dollar). 4 Loan Interest Principal Payment Payment MACRS- GDS Deduction Taxable Income Tax ATCF
7) EmKay, Inc. is considering an investment in a new production equipment to boost its revenue. For this new investment, the following data apply: Purchase price = $900,000 $360,000 from company funds and $540,000 from a loan} Useful Life: 4 years Depreciation: MACRS-GDS 3-year property Effective tax rate: 35% Estimated salvage: $90,000 Estimated annual O&M costs: $48,000 Estimated new annual revenue: $360,000 Conditions on loan: Nominal annual rate of 5% per year compounded annually. The loan is to be repaid over 3 years with equal annual payments. a) Loan calculations - principal and interest payments. (Round off values to the nearest dollar) b)' O EOY BT&LCF Loan 1 2 3 Find the ATCF for each year of this investment (Round off values to the nearest dollar). 4 Loan Interest Principal Payment Payment MACRS- GDS Deduction Taxable Income Tax ATCF
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 14P
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