N1 STEP 2: Compute the PV of the following years as follow with giving data:after tax lease payment$8,200$8200$8200year34depreciation tax shield$5,100$5,100$5100compute PV of these cash flows as the end of year 3: while using discount rate equal to 5%.tax credit$650000residual00$2,500

Name: N1 STEP 2: Compute the PV of the following years as follow with giving
Uploaded: 2024-03-20T06:50:59.000Z
Channel: Bartleby
Description: N1 STEP 2: Compute the PV of the following years as follow with giving data:after tax lease payment$8,200$8200$8200year34depreciation tax shield$5,100$5,100$5100compute PV of these cash flows as the end of year 3: while using discount rate equal to 5

The difference between the current value of cash inflows and outflow of cash over a period of time…

Business

Finance

STEP 2: Compute the PV of the following years as follow with giving data: after tax lease payment $8,200 $8200 $8200 year 4 5 depreciation tax shield $5,100 $5,100 $5100 compute PV of these cash flows as the end of year 3: while using discount rate equal to 5%. tax credit $6500 0 0 residual 0 0 $2,500

STEP 2: Compute the PV of the following years as follow with giving data: after tax lease payment $8,200 $8200 $8200 year 4 5 depreciation tax shield $5,100 $5,100 $5100 compute PV of these cash flows as the end of year 3: while using discount rate equal to 5%. tax credit $6500 0 0 residual 0 0 $2,500

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

See similar textbooks

Similar questions

A company anticipates a taxable cash expense of $80,000 in year 2 of a project. The company's tax rate is 30% and its discount rate is 10%. The present value of this future cash flow is closest to: Select one: a. $(56,000) b. $(19,835) c. $(46,281) d. $(24,000)
Assume a corportation has earnings before depreciation and taxes of $100,000, depreciation of $50,000, and is in a 30% percent tax bracket. Compute its cash flow using the format. Earnings before depreciation and taxes Depreciation Earnings before taxes Taxes @ 30% Earnings after taxes Depreciation 2a) In problem 1 , how much would cash flow be if there were only $10,000 in depreciation ? All other factors are the same. 2b) How much cash flow is lost due to the reduced depreciation between Problems 1 and 2a?
The following data are from an after-tax cash flow analysis in year 1 for anew MACRS 5-year property. How much money would be saved in year 1 if 100% bonus depreciation is used? Initial Investment = $180,000 Regular MACRS Depreciation Deduction in Year 1 = $36,000 Before-Tax-and-Loan Cash Flow = $280,000 Loan Principal Payment = $17,500 Interest on Loan = $5,650. a. $30,240 b. $75,600 c. $37,800 d. $36,000.
Calculate the Payback Period using the following Information All figures are in OMR Initial Investment = 10000 Cash Flow after Tax(CFAT) are as follows : Year 1 : 5000 Year 2 : 3000 Year 3 : 2000 Year 4 : 3000 Year 5 : 50000 2.5 Years 3 Years 3 Years and 10 months 3 Years and 2 months
Calculate the Payback Period using the following Information All figures are in OMR Initial Investment = 25000 Cash Flow after Tax(CFAT) are as follows : Year 1 : 5000 Year 2 : 5000 Year 3 : 5000 Year 4 : 4000 Year 5 : 6000 4 Years and 6 months 5 Years 5 Years 2 Years
Suppose an asset has a first cost of $8,000,a life of five years, a salvage value of $2,000 atthe end of five years, and a net annual before-taxrevenue of $2,500. The firm’s marginal tax rate is35%. The asset will be depreciated by three-yearMACRS.(a) Using the generalized cash flow approach, determine the cash flow after taxes.(b) Rework part (a), assuming that the entire investment would be financed by a bank loan at aninterest rate of 9%.(c) Given a choice between the financing methodsof parts (a) and (b), show calculations to justifyyour choice of which is the better one at an interest rate of 9%.
Mario Kat, Inc plans a new project. Calculate its IRR. Assume that its initial after tax cost is $5,000,000 and it is expected to provide after-tax operating cash flows of ($1,800,000) in year 1, $2,900,000 in year 2, $2,700,000 in year 3 and $2,300,000 in year 4?
Mf1. Consider an asset that costs $492,800 and is depreciated straight-line to zero over its 6-year tax life. The asset is to be used in a 2-year project; at the end of the project, the asset can be sold for $61,600. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset?
An asset costing £20,000 is expected to last three years when it can be sold for £16,000. The tax rate is 28%, capital allowances of 20% p.a. on a reducing balance basis are available and the cost of capital is 10%. What is the tax saving in respect of the capital allowances in year 2? Question 10Select one: a. £3,000 b. £2,526 c. £896 d. £717
A project has the following net profit after tax set out below. The average book value of the assets in the project is 131,028. What is the accounting rate of return of this project? Enter your final answer in decimals to four decimal places (e.g., if your answer is 5.55%, then enter 0.0555). Year Net Profit After Tax 1 5,097 2 7,365 3 8,627 4 10,946
A company is considering investment of k1,000,000 in a project. The following are the forecasts, after depreciation and tax. Year 1 Cash Inflows Discount Present Value Factor at 10% 1 10,000 0.9091 2 40,000 0.8265 3 60,000 0.7513 4 20,000 0.6830 5 - 0.6209 Compute: Payback period Discounted payback Net present value In all instances comment on the Decision criteria
PART B Assume that the bank decided to give a loan of $ 59 million to Nivea Corporation (recorded for initial year). Nivea-Corporation invested the amount in a project and generated the following sequence of cash flows over six years: Year Cash Flow ($ million) 0 -59.00 1 4.00 2 5.00 3 6.00 4 7.33 5 8.00 6 8.25 Calculate the Payback period Calculate the Net Present Value (NPV) and the Profitability Index (PI) over the six years. Assume any discount rate This project does not end after the sixth year but instead will generate cash flows far into the future. Estimate the project’s terminal value, assuming that cash flows after year 6 continue at $8.25 per year perpetuity and then recalculate the investment’s NPV. Calculate the terminal value assuming that cash flows after the sixth year grow at 2% annually in perpetuity, and then recalculate the