Question
Could you please help answer 6,7,8,9 for the Encryptco is considering a project? Encryptco is considering a project that will last 10 years. Its after
Could you please help answer 6,7,8,9 for the Encryptco is considering a project?
Encryptco is considering a project that will last 10 years. Its after tax MARR is 12% and its tax rate is 50%. The project is exptected to bring in $2.8 Million to the firm each year. The first cost will cost of purchases detailed below.
Office Furniture - $500,000
Computers - $300,000 in the first year, $400,000 in the fifth year. Salvage value of 0 in both cases
Software - $600,000 in the first year, $600,000 in the fifth year. Salvage value of 0 in both cases
Vehicles - $3 Million in the first year, $4 million in the 5th year. Each set of vehicles will be salvaged in the 5th year and at the end of the 10 year at the calculated book value at those times.
Employees - $1.1 million in the first year, increasing by 3% each year until end of the project.
Question:
6, Set up the timing diagram of the project. Include all applicable taxes.
7. Calculate the present worth of the project
8. Calculate the approximate after tax IRR of the project.
9. How sensitive is the project to variation in the first cost? Change the first cost by +/- 15% in the steps of +/- 5%. Plot the Present Worth VS variation in the First Cost.
Please help answer these questions. Thank you.
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