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a). Complete the spreadsheet below by estimating the project's annual after tax cash flow. Facts and Assumptions Equipment initial cost $ $350,000 Depreciable life yrs.
a). Complete the spreadsheet below by estimating the project's annual after tax cash flow.
Facts and Assumptions | |
Equipment initial cost $ | $350,000 |
Depreciable life yrs. | 7 |
Expected life yrs. | 10 |
Salvage value $ | $0 |
Straight line depreciation |
|
EBIT in year 1 | 28,000 |
Tax rate | 38% |
Growth rate in EBIT | 3% |
Discount rate | 10% |
Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
Initial cost | 350,000 | ||||||||||
Annual depreciation | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | ||||
EBIT | 28,000 | 28,840 | 29,705 | 30,596 | 31,514 | 32,460 | 33,433 | 34,436 | 35,470 | 36,534 |
Net present value @ 10% |
Internal rate of return |
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