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1.)The table below summarizes the expected impacts of a potential investment project. Complete the table by entering the taxable income and taxes for years 1
1.)The table below summarizes the expected impacts of a potential investment project.
Complete the table by entering the taxable income and taxes for years 1 through 5, and NATCF values for years 0 through 5. Use a marginal tax rate of 25%.
Make sure you complete the entire table - you may need to scroll to the right to see all columns.
Year | Initial Investment | Inflows | Outflows | Depreciation | Total Loan Payment | Loan Interest | Taxable Income | Taxes | NATCF |
0 | 25,000 | ||||||||
1 | 30,000 | 2,000 | 15,000 | 18,500 | 2,500 | ||||
2 | 30,000 | 2,000 | 15,000 | 18,500 | 1,700 | ||||
3 | 30,000 | 2,000 | 15,000 | 18,500 | 900 | ||||
4 | 30,000 | 2,000 | 15,000 | ||||||
5 | 35,000 | 6,000 |
2.)The NATCFs for a potential investment are provided below. Using a discount rate of 14%, enter the present values for each natcf and calculate the NPV for the investment. Round each value to the nearest dollar.
Year | NATCF | Present Value (PV) |
0 | -30,000 | |
1 | 8,000 | |
2 | 8,000 | |
3 | 10,000 | |
4 | 10,000 | |
5 | 15,000 | |
NPV = |
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