allaloo Collaborators, Inc. has been considering several capital investment proposals for the year beginning in 2019. For each investment proposal, the relevant cash flows and other relevant financial data are summarized in the table below. New assets will be depreciated under the MACRS system rather than being fully expensed right away. In the case of a replacement decision, the total installed cost of the equipment will be partially offset by the sale of existing equipment. The firm is subject to a 40 percent tax rate on ordinary income and on long-term capital gains. The firm's cost of capital is 15 percent.
Callaloo Collaborators, Inc. has been considering several capital investment proposals for the year beginning in 2019. For each investment proposal, the relevant cash flows and other relevant financial data are summarized in the table below. New assets will be
Table 1.
Callaloo Collaborators, Inc. Project Information
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*Not applicable
Project 1 Questions:
1) For Proposal 1, the cash flow pattern for the expansion project is ________.
2) For Proposal 1, the initial outlay equals __$1,500,000______.
3) For Proposal 1, the depreciation expense for year 1 is __$1,500,000______.
4) For Proposal 1, the annual incremental after-tax cash flow from operations for year 1 is __$210000______.
5) For Proposal 2, the cash flow pattern for the replacement project is ________.
6) For Proposal 2, the book value of the existing asset at the end of the fifth year is ________.
7) For Proposal 2, the tax effect on the sale of the existing asset at the end of the fifth year results in ________.
8) For Proposal 2, the initial outlay equals ________.
9) For Proposal 2, the incremental depreciation expense for year 2 is ________.
10) For Proposal 2, the annual incremental after-tax cash flow from operations for year 2 is ________.
11) For Proposal 3, the cash flow pattern for the replacement project is ________.
12) For Proposal 3, the book value of the existing asset is ________.
13) For Proposal 3, the tax effect on the sale of the existing asset results in ________.
14) For Proposal 3, the initial outlay equals ________.
15) For Proposal 3, the incremental depreciation expense for year 3 is ________.
16) For Proposal 3, the incremental depreciation expense for year 6 is ________.
17) For Proposal 3, the annual incremental after-tax cash flow from operations for year 3 is ________.
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