rea: 1. What is the net present value (NPV) of the proposed Investment under each of the following independent situations? (Use the appropriate present value factors from Appendix C. TABLE 1 and Appendix C, TABLE 2.) 1a. The firm is not yet profitable and therefore pays no Income taxes. 1b. The firm is in the 22% Income tax bracket and uses straight-line (SLN) depreciation with no salvage value. Assume MACRS rules do not apply. 1c. The firm is in the 22% Income tax bracket and uses double-declining-balance (DDB) depreciation with no salvage value. Given a four-year life, the DDB depreciation rate is 50% (1.e., 2 x 25% ). In year four, record depreciation expense as the net book value (NBV) of the asset at the start of the year. 2. What is the Internal rate of return (IRR) of the proposed Investment for situations in requirement 1, parts (a) through (c)? Use the IRR bullit-in function in Excel to compute the IRR.
rea: 1. What is the net present value (NPV) of the proposed Investment under each of the following independent situations? (Use the appropriate present value factors from Appendix C. TABLE 1 and Appendix C, TABLE 2.) 1a. The firm is not yet profitable and therefore pays no Income taxes. 1b. The firm is in the 22% Income tax bracket and uses straight-line (SLN) depreciation with no salvage value. Assume MACRS rules do not apply. 1c. The firm is in the 22% Income tax bracket and uses double-declining-balance (DDB) depreciation with no salvage value. Given a four-year life, the DDB depreciation rate is 50% (1.e., 2 x 25% ). In year four, record depreciation expense as the net book value (NBV) of the asset at the start of the year. 2. What is the Internal rate of return (IRR) of the proposed Investment for situations in requirement 1, parts (a) through (c)? Use the IRR bullit-in function in Excel to compute the IRR.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 15E: Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided...
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