Pertinent information for two alternatives A and B is shown below. If i=10%/year and the effectiveincome tax rate is 40%, answer the following true/false questions.Alt. AAlt.B300,00050,000Basis, $CFBT, $MACRS Recovery, YearsSalvage Value, $Useful Life, YearsO True200,000O False40,000520,0006The CFAT of Alt. B at the end of year 1 is less than $5,000.530,0007

Companies invest money in projects in the hope there will be cash flows from the project in the…

Pertinent information for two alternatives A and B is shown below. If i=10%/year and income tax rate is 40%, answer the following true/false questions. Alt. A Alt.B Basis, $ CFBT, $ MACRS Recovery, Years Salvage Value, $ Useful Life, Years 200,000 40,000 5 20,000 6 300,000 50,000 5 30,000 7

Pertinent information for two alternatives A and B is shown below. If i=10%/year and income tax rate is 40%, answer the following true/false questions. Alt. A Alt.B Basis, $ CFBT, $ MACRS Recovery, Years Salvage Value, $ Useful Life, Years 200,000 40,000 5 20,000 6 300,000 50,000 5 30,000 7

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

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Question

Pertinent information for two alternatives A and B is shown below. If i=10%/year and the effective
income tax rate is 40%, answer the following true/false questions.
Alt. A
Alt.B
300,000
50,000
Basis, $
CFBT, $
MACRS Recovery, Years
Salvage Value, $
Useful Life, Years
O True
200,000
O False
40,000
5
20,000
6
The CFAT of Alt. B at the end of year 1 is less than $5,000.
5
30,000
7

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Two mutually exclusive alternatives have the estimates shown below. Use annual worth analysis to determine which should be selected at an interest rate of 10% per year. Q $-44,000 R $-84,000 First Cost AOC per Year Salvage Value $-10,000 $-5,000 in year 1, increasing by $1,000 per year thereafter $4,000 $5,000 Life 2 years 4 years Alternative (Click to select) should be selected.
Two investment opportunities are as follows: A B First cost $150 $115 Uniform annual benefit $26 $20 End-of-useful-life salvage value $O SO Useful life, in years 10 10 If the MARR is 13%, which alternative should be selected?
Data for 2 alternatives are given below. If i = 10%, determine the cost of alternative A so that the 2 alternatives will be equally desirable using BC ratio.
HOMEWORK-DEPRECIATION/TAXES Initial cost $400,000 $160,000 $30,000 Annual Revenue Annual Expense Recovery Period (expected life) 5 Tax Rate 30% MARR 12% 6. Construct a complete Income Statement using SL 7. Construct an Income Statement using MACRS.
The cash flows for two alternatives are shown. The correct equation for computing the AW of Alternative B at 10% per year interest is: A B First Cost, $ |-25,000 |-17000 Annual cost, $ per year -3000 |-3200 Salvage Value, $ |1100 2100 Life, years 3 5 O AW(B)=-17,000(A/P, 10%, 5) -3200 (A/P, 10%, 5)+2100(A/F, 10%, 5) AW(B)=-17,000 (A/P, 10%, 5)-3200-2100(A/F, 10%, 5) AW(B)=-17,000 (A/P, 10%, 15)-3200+2100(A/F, 10%, 15) O AW(B)=-17,000 (A/P, 10%, 5)-3200+2100(A/F, 10%, 5)
Given the following table for two alternatives. consider that the interest rate = 10% Alternative A B First cost, $ -90,000 -750,000 AOC, $/year -50,000 -10,000 Salvage value, $ Life, years 8,000 2,000,000 00 All of the following equations for calculating the capitalized cost of alternative B are correct, except: Select one: = -750,000 – 10,000/0.10 a. + 2,000,000/(1+0.10) b. = [-750,000(0.10) – 10,000]/0.10 c. capitalized cost = -750,000 – 10,000/0.10 + 2000000 (0.10) d. capitalized cost = -750,000 – 10,000/0.10
Select the best alternative among the following altenatives using rate of return analysis MARR is 12% per year. C. 260,000 310,000 390,000 30,000 100,000 150,000 180,000 B. First cost, S Annual disbursement, S 65,000 Salvage value, S Life, year 40,000 10 10 15
6) Data for 2 alternatives are given below. If i = 10%, determine the cost of alternative A so that the 2 alternatives will be equally desirable using BC ratio. Alternatives A B Cost X P3,200 Salvage Value 900 600 Annual Benefit 1150720 Life (years) 8 8
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Compare the altermatives shown below on the basis of their capitalized costs, using an interest rate 12% per year, compounded quarterly. Alternative A Alternative B Alternative C First cost ($) Quarterly income ($/quarter)_ 200,000 300,000 900,000 30,000 10,000 40,000 Salvage value ($) 50,000 70,000 100,000 Life (years) 2 4

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