A five-year project has an initial fixed asset investment of $290,000, an initial NWC investment of $25,000, and an annual OCF of -$35,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 11 percent, what is this project's equivalent annual cost, or EAC? Initial fixed asset investment $ 290,000 Initial NWC investment $ 25,000 Annual OCF $ (35,000) Required return 11% *Depreciation staight-line over life 5 Complete the following analysis. Do not hard code values in your calculations. You must use the built-in Excel functions to answer this question. Cash flows Year 0 Year 1 Year 2 Complete the following analysis. Do not hard code values in your calculations. You must use the built-in Excel functions to answer this question. Cash flows Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 NPV EAC A proposed new investment has projected sales of $635,000. Variable costs are 44 percent of sales, and fixed costs are $193,000; depreciation is $54,000. Prepare a pro forma income statement assuming a tax rate of 21 percent. What is the projected net income? Projected sales $ 635,000 Variable cost (% of sales) 44% Fixed cost Depreciation Tax rate 6 6 $ 193,000 $ 54,000 21% Complete the following analysis. Do not hard code values in your calculations. Sales Variable costs Fixed costs Depreciation EBT Taxes Net Income Costs Pretax salvage value Tax rate Years for depreciation Year asset is sold $ 69 69 730,000 $ 192,000 23% 8 5 Complete the following analysis. Do not hard code values in your calculations. Annual depreciation Accumulated depreciation Book value Aftertax cash flow Pretax salvage value Taxes Aftertax salvage value A piece of newly purchased industrial equipment costs $1,240,000 and is classified as seven-year property under MACRS. Calculate the annual depreciation allowances and end-of-the-year book values for this equipment. Complete the following analysis. Do not hard code values in your calculations. Depreciation Ending Book value Year Beginning Book Value $ EA 1,240,000.00 2 12345678 MACRS 0.1429 0.2449 0.1749 0.1249 0.0893 0.0892 0.0893 0.0446