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can you show how to solve this withiut excel ? Next three questions: A farmer from the Corvallis area calls the Finance Department and wants
can you show how to solve this withiut excel ?
Next three questions: A farmer from the Corvallis area calls the Finance Department and wants to know the answer to the following question: "Suppose I buy a cow for $6,500 today (now, date 0). The depreciation on the cow would be straight-line to zero over five years (years 1 to 5). Revenues minus costs (not including depreciation), would be $1,300 in each of the next five years (years 1 to 5). In year five, I expect to sell the cow for $5,200. Is this a good investment? He also claims that his tax rate is 30% and his cost of capital is 10%. Assume that the farmer has constant annual profits of $50,000 from other projects. 28. What is the net cash flow in year 5? 29. What is the NPV of this farming project? 30. Given choice, the farmer should prefer: A) to stay with the current straight-line depreciation scheme. B) to use a 3-year MACRS accelerated depreciation - 33.3% in year 1), 44.5% (in year 2), 14.8% (in year 3) and 7.4% (in year 4). C) to use a 5-year MACRS accelerated depreciation - 20.0% (in year 1), 32.0% (in year 2), 19.2% (in year 3), 11.5% (in year 4), 11.5% in year 5) and 5.8% in year 6). I D) to apply immediate depreciation (100% depreciation in year 0). a Step by Step Solution
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