Question
A food cart that costs $5000, has a salvage value of $400 and will be depreciated over 4 years using the DDB method. The cash
A food cart that costs $5000, has a salvage value of $400 and will be depreciated over 4 years using the DDB method. The cash flow before taxes (BTCF) is presented below. Using a tax rate of 25%, answer the following questions. [13 points] a) Prepare the table below showing the depreciation expenses and book values fot the DDB depreciation method. [5 points] Year Dt Dt BV 0 1 2 3 4 b) Fill in the following table [4 points] Before Taxes Year Cash Flow 0 -$5,000 1 $3,550 2 $3,600 3 $3,750 4 $3,800 DDB Depreciation Taxable Income Taxes After Taxes Cash Flow c) What is the internal rate of return of the after tax cash flows? [4 points]
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started