Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
| New Project Analysis | ||||
| Expected | Salvage | |||
| $ Cost | Use, Years | Value | ||
| New Equipment | 70,000.0 | 3.0 | 30,000.0 | |
| Install Cost, New Equipment | 15,000.0 | |||
| Increase, Net Working Capital | 4,000.0 | |||
| Before-Tax Cost-Savings/Year | 25,000.0 | |||
| Marginal Tax Rate | 40.00% | |||
| Cost Of Capital | 10.00% | |||
| Year 1 | Year 2 | Year 3 | Year 4 | |
| 3-Year MACRS Depreciation | 33.33% | 44.45% | 14.81% | 7.41% |
| Answers | Year 1 | Year 2 | Year 3 | |
| Depreciation Tax Savings/Year | ||||
| After Tax Cost Savings/Year | ||||
| Year 3 Book Value | ||||
| Taxes On Sale, Year 3 | ||||
| After-Tax Salvage Value | ||||
| Additional Year 3 Cash Flow | ||||
| Year 0 | Year 1 | Year 2 | Year 3 | |
| Net Cash Flow | ||||
| Net Cash Flow | ||||
| Purchase System? |
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