Calculate NPV, Payback and IRR Table 1 Net cost of new plane Additional revenue Financial analysis of
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Calculate NPV, Payback and IRR
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Table 1 Net cost of new plane Additional revenue Financial analysis of project A: Add a twin-jet to the company's fleet Additional operating costs Amortization Net increase in income Less: Tax at 33% Increase in aftertax income Add back amortization Net change in cash flow Initial Expenditures $300,000 ($300,000) Year 1 $43,000 11,250 45,000 (13,250) 0 ($13,250) $45,000 31,750 Year 2 $76,800 11,250 66,000 (450) 0 Year 3 65,550 Year 4 $112,300 $225,000 11,250 63,000 38,050 150,750 12,557 49,748 ($ 450) $ 25,494 $66,000 $ 63000 88,494 11,250 63,000 $101,003 $ 63,000 164,003 Year 5 $168,750 11,250 63,000 94,500 31,185 $ 63,315 $ 3,000 126,315 Table 1 Net cost of new plane Additional revenue Financial analysis of project A: Add a twin-jet to the company's fleet Additional operating costs Amortization Net increase in income Less: Tax at 33% Increase in aftertax income Add back amortization Net change in cash flow Initial Expenditures $300,000 ($300,000) Year 1 $43,000 11,250 45,000 (13,250) 0 ($13,250) $45,000 31,750 Year 2 $76,800 11,250 66,000 (450) 0 Year 3 65,550 Year 4 $112,300 $225,000 11,250 63,000 38,050 150,750 12,557 49,748 ($ 450) $ 25,494 $66,000 $ 63000 88,494 11,250 63,000 $101,003 $ 63,000 164,003 Year 5 $168,750 11,250 63,000 94,500 31,185 $ 63,315 $ 3,000 126,315
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Net Present Value NPV The NPV is the sum of the discounted cash flows over the life of the project T... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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