Answered step by step
Verified Expert Solution
Question
1 Approved Answer
having problems figuring the blanks that arent done. ON eEgg is considering the purchase of a new distributed network computer system to help handle its
having problems figuring the blanks that arent done.
ON eEgg is considering the purchase of a new distributed network computer system to help handle its warehouse Inventories. The system costs $41,000 to purchase and install and $25,000 to operate each year. The system is estimated to be useful for 4 years Management expects the new system to reduce the cost of managing inventories by $46,000 per year. The firm's cost of capital (discount rate) is 11% Required: 1. What is the net present value (NPV) of the proposed investment under each of the following independent situations? (Use the appropriate present value factors from Argendix C TABLE 1 and Appendix C. TABLE 2.) 1a. The firm is not yet profitable and therefore pays no income taxes. 16. The firm is in the 21% income tax bracket and uses straight-line (SLN) depreciation with no salvage value. Assume MACRS rules do not apply 10. The firm is in the 21% income tax bracket and uses double-declining balance (DDB) depreciation with no salvage value. Given a four-year life, the DDB depreciation rate is 50%,. 225%). In year four, record depreciation expense as the net book value (NBV) of the asset at the start of the year 2. What is the internal rate of return (IRR) of the proposed investment for situations in requirement 1, parts (o) through (c)? Use the IRR bullit-in function in Excel to compute the IRR. cos Complete this question by entering your answers in the tabs below. Reg 1A Reg 10 Reg 10 Reg 2 The firm is in the 21% income tax bracket and uses double-declining-balance (DDB) depreciation with no salvagy value. Given a four-year life, the DDB depreciation rate is 50% (Le., 2 x 25%). In year four, record depreciation expense as the net book value (NBV) of the asset at the start of the year. (Negative amounts should be indicated by a minus sign. Round discount factor to 3 decimal places and other answers to the nearest whole dollar amount.) Show less DDB nem Adax Net Reg 1A Reg 1B Req 1C Reg 2 The firm is in the 21% income tax bracket and uses double-declining-balance (DDB) depreciation with no salvage value. Given a four-year life, the DDB depreciation rate is 50% (i.e., 2 x 25%). In year four, record depreciation expense as the net book value (NBV) of the asset at the start of the year. (Negative amounts should be indicated by a minus sign. Round discount factor to 3 decimal places and other answers to the nearest whole dollar amount.) Show less Taxable Income Income Taxes Year Discount Factor After-tax Not Cash Inflow Present Values Pre-Tax Cash DDB Depreciation Inflows Expenso $ (41,000) 20.500 0 1 105 2 10.250 5,125 5,125 500 10,750 15,875 15,875 $ (41,000) $ 20,895 18,742 17,666 17,666 Net present value (NPV) = $ 2,258 3,334 3,334 3 (41,000) 18,824 15,211 12,9171 11,637 17,589 4 Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started