Question
A project has a initial cost of $180,000, an estimated salvage value of $20,000 after 6 years, and other economic attributes as detailed in the
A project has a initial cost of $180,000, an estimated salvage value of $20,000 after 6 years, and other economic attributes as detailed in the table below. Unfortunately, as the end of year 4 neared, the project had to be abandoned, and the assets market value at that time was different from the original estimated salvage value. There was a loan to help finance the project. It was being paid back in equal annual installments (the yearly principal plus interest payment was the same). The remaining principal had to be paid at the end of year 4 when the project was stopped. Corporate income taxes are 25%. Following is the table (Note: The shaded cells would normally have something in them but have been erased for this exercise):
2 3 $40,000 $40,000 $ Fill in all of the blanks with BOLD BORDERS. EOY o 1 BTLCF +IN; - - $ 180,000 $40,000 OUT LOAN PRINC $70,000 $9,786 +IN; - OUT LOAN PRINCRE $70,000 $60,214 MAIN LOAN INT -$4,900 +IN; - OUT DEPR $36,000 $ $49,744 $ -$4,215$ $180,000 $144,000 BK VALUE TI 1 $1,958 $5,454 -$489 $ TAX +IN; - OUT ATCF +IN; - OUT PWATCE -$110,000 $25,539 $ $24,825 -$110,000 $29,177 Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is +20. 2 3 $40,000 $40,000 $ Fill in all of the blanks with BOLD BORDERS. EOY o 1 BTLCF +IN; - - $ 180,000 $40,000 OUT LOAN PRINC $70,000 $9,786 +IN; - OUT LOAN PRINCRE $70,000 $60,214 MAIN LOAN INT -$4,900 +IN; - OUT DEPR $36,000 $ $49,744 $ -$4,215$ $180,000 $144,000 BK VALUE TI 1 $1,958 $5,454 -$489 $ TAX +IN; - OUT ATCF +IN; - OUT PWATCE -$110,000 $25,539 $ $24,825 -$110,000 $29,177 Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is +20Step by Step Solution
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