FIND IT UNTIL 6TH PERIOD
More Info The following data have been collected: First cost = $120,000 to be borrowed at 9% interest with only interest paid each year and the principal due in a lump sum at end of year 2. Economic service life (project life) = 6 years. Estimated selling price in year-0 dollars = $15,000. Depreciation = five-year MACRS property. Marginal income tax rate = 25% (remains constant). Annual revenue = $145,000 (today's dollars). Annual expense (not including depreciation and interest) = $82,000 (today's dollars). Market interest rate = 18%. Print Done (a) With an average general inflation rate of 5% expected during the project period (which will affect all revenues, expenses, and the salvage value of the computer), determine the cash flows in actual dollars. Fill in the table below. (Round to one decimal place.) Year Net After-Tax Cash Flow 0 $ thousand $I thousand 2 $thousand 1 (b) Compute the net present value of the project under inflation. The net present value of the project under inflation is $ thousand. (Round to one decimal place.) (c) Compute the net present-value loss (gain) due to inflation. The net present-value loss (gain) due to inflation is $ thousand. (Round to one decimal place.) (d) In part (c), how much is the present-value loss (or gain) due to borrowing? The present-value loss (or gain) due to borrowing is $thousand. (Round to one decimal place.) More Info The following data have been collected: First cost = $120,000 to be borrowed at 9% interest with only interest paid each year and the principal due in a lump sum at end of year 2. Economic service life (project life) = 6 years. Estimated selling price in year-0 dollars = $15,000. Depreciation = five-year MACRS property. Marginal income tax rate = 25% (remains constant). Annual revenue = $145,000 (today's dollars). Annual expense (not including depreciation and interest) = $82,000 (today's dollars). Market interest rate = 18%. Print Done (a) With an average general inflation rate of 5% expected during the project period (which will affect all revenues, expenses, and the salvage value of the computer), determine the cash flows in actual dollars. Fill in the table below. (Round to one decimal place.) Year Net After-Tax Cash Flow 0 $ thousand $I thousand 2 $thousand 1 (b) Compute the net present value of the project under inflation. The net present value of the project under inflation is $ thousand. (Round to one decimal place.) (c) Compute the net present-value loss (gain) due to inflation. The net present-value loss (gain) due to inflation is $ thousand. (Round to one decimal place.) (d) In part (c), how much is the present-value loss (or gain) due to borrowing? The present-value loss (or gain) due to borrowing is $thousand. (Round to one decimal place.)
