2.Select the preferred alternative using ATCF-Present-Worth(PW) and using Incremental Analysis Method after removing the inflation. (f = 2%) to obtain Real Dollars.. Tax rate 38% MARR = 8%

Assume actual cash flows are in actual dollars (A$) )(base=0) R$k A$k (P / F, f , k b) A$k ( 1 1 f

Depreciation method

)(k b)

o o o

For Alt-A Straight-Line (SL) Method (Classical Method) SL=(Investment-SV) / N For Alt-B MACRS GDS 7 years recovery period.

For Alt-C MACRS-ADS 7 years recovery period.

Find the ATCF for the alternatives using R$ cash flows, them evaluate all alternatives on ATCF using incremental analysis PW.

($000) A$

Capital Investment

Annual Expenses

Annual Revenues

Market Value (MV or SV)) Useful life

Usar ir para cmputo de PW en ATCF parte 2

A $20,000

10,000 12,000 2,000

10

ic f ir 1f

B $25,000

5,000 8,000 2,000 10

(1/(1+f))^k

(- ? )

C $40,000

2,000 6,000 5,000

10

R$ ATCF -------

EOY[k]

0 1-10 10

A$- BTCF

Depreciation Macrs-GDS --------

Taxable Income --------

TAX= -.38*TI --------

A$ ATCF

En ambos casos se requiere INCREMENTAL ANALYSIS ATCF Incremental Analysis

ATCF-A ATCF-B ATCF-C (B-A) PWB-A(MARR%)=???