Homework: Chapter 21 Homework Save 11 of 12 (10 complete) HW Score: 52.67%, 15.8 of 30 pts Score: 0 of 4 pts P21-35 (similar to) Question Help Max Chips is a manufacturer of prototype chips based in Buffalo, New York, (Click the icon to view the prototype chips information.) (Click the icon to view information on the options.) Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements 0 More Info i Requirements - X pn and the terminal disposal minus sign or parentheses 1. Next year, in 2018, Max Chips expects to deliver 555 prototype chips at an average price of $90,000. Max Chips' marketing vice president forecasts growth of 85 prototype chips per year through 2024. That is, demand will be 555 in 2018, 640 in 2019, 725 in 2020, and so on. 2. 3. Calculate the after-tax cash inflows and outflows of the modernize and replace alternatives over the 2018 - 2024 period Calculate the net present value of the modernize and replace alternatives Suppose Max Chips is planning to build several more plants. It wants to have the most advantageous tax position possible. Max Chips has been approached by Spain, Malaysia, and Australia to construct plants in their countries. Briefly describe in qualitative terms the income tax features that would be advantageous to Max Chips The plant cannot produce more than 525 prototype chips annually. To meet future demand, Max Chips must either modernize the plant or replace it. The old equipment is fully depreciated and can be sold for $4,700,000 if the plant is replaced. If the plant is modernized, the costs to modernize it are to be capitalized and depreciated over the useful life of the updated plant. The old equipment is retained as part of the modernize alternative Print Done Print Done 4 4 parts remaining Clear All Check Answer Save Homework: Chapter 21 Homework Score: 0 of 4 pts P21-35 (similar to) 11 of 12 (11 complete) HW Score: 52.87%, 15.86 of 30 pts Question Help Max Chips is a manufacturer of prototype chips based in Buffalo New York (Click the icon to view the prototype chips information.) Present Value of $1 table Present Value of Annuity of $1 0 Data Table Read the requirements The following data on the two options are available: Requirements 1 and 2. Calculate the after-tax cash inflows t value for each alternative Let's begin with the modernize alternative. Start by computi value, and finally determine the total net present value (NP for a negative present value of net cash flows.) ash savings from depreciation and the terminal disposal nearest whole dollar. Use a minus sign or parentheses $ $ Modernize $ 36,300,000 $ 7,500,000 7 years $ 72,500 Initial investment in 2018 Terminal disposal value in 2024 Useful life Total annual cash operating cost per prototype chip Replace 63,800,000 17,200,000 7 years 65,000 PV facto $ Net initial investment After-tax cash flows from operations: Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 Max Chips uses straight-line depreciation, assuming zero terminal disposal value. For simplicity, we assume no change in prices or costs in future years. The investment will be made at the beginning of 2018, and all transactions thereafter occur on the last day of the year. Max Chips' required rate of return is 20%. There is no difference between the modernize and replace alternatives in terms of required working capital Max Chips pays a 20% tax rate on all income. Proceeds from sales of equipment above book value are taxed at the same 20% rate Print Done Enter any number in the edit fields and then click Check A 4 parts remaining Clear All Check Answer Homework: Chapter 21 Homework Save Score: 0 of 4 pts 11 of 12 (10 complete) HW Score: 52.67%, 15.8 of 30 pts a stion Help - X Periods minal disposal parentheses P21-35 (similactal Max Chips is a ma 0 Reference (Click the icon Present Value of Present Value of $1 Read the requiren Periods 2% 1 0 .980 Requirements 10 0.961 0.942 Let's begin with the 0924 value, and finally 0.906 for a negative pres 0888 0.871 0.853 0.837 0.820 Net initial investm 0804 After-tax cash flo 0.788 0.773 Dec 31, 2018 14 0.758 15 0.743 Dec 31, 2019 16 0.728 Dec 31, 2020 17 0.714 18 0.700 19 0.686 Enter any number 4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.475 6% 8% 10% 12% 0.943 0.926 0.909 0.893 0.890 0.857 0.826 0.797 0.840 0.794 0.751 0.712 0 792 0.735 0 6830 636 0.747 0.681 0.621 0.567 0.705 0.630 05640507 0.6650.583 0.513 0.452 0.627 0.540 0.467 0.404 0.592 0.500 0.424 0.361 0.558 0.463 0.386 0.322 0527 0.429 0 3500 287 0.497 0.397 0.319 0.257 0.469 0.368 0.290 0.229 0.442 0.3400.263 0.205 0.417 0.315 0.239 0.183 0.394 0.292 0.218 0.163 0.371 0.270 0.198 0.146 0.350 0.250 0.180 0.130 0.331 0.232 0.164 0.116 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 40% 0.877 0.862 0.8470.833 0.820 0.806 0.794 0.781 0.769 0.758 0.714 0.769 0.743 0.718 0.694 0.672 0.650 0.630 0.610 0.592 0.574 0.510 0.675 0.641 0.609 0.579 0.551 0.524 0.500 0.477 0.455 0.435 0.364 05920 552 0516 0482 0.451 04230397 0373 0 350 0329 0260 0.519 0.476 0.437 0.402 0.370 0.341 0.315 0.291 0.269 0.250 0.186 0456 0.410 03700335 0.303 0275 0.250 0 227 0.207 0.189 0.133 0.400 0.354 0.314 0.279 0.249 0.222 0.198 0.1780.159 0.143 0.095 0.351 0.305 0.266 0.233 0.204 0.179 0.157 0.139 0.123 0.108 0.068 0.308 0.263 0.225 0.194 0.167 0.144 0.125 0.108 0.094 0.082 0.048 0.270 0.227 0.19 0.162 0.137 0.116 0.099 0.085 0.073 0.062 0.035 0237 0 1950 162 0 1350 112 009400790 066 0.056 0047 0.025 0.208 0.168 0.137 0.112 0.092 0.076 0.062 0.052 0.043 0.036 0.018 0.182 0 .145 0.116 0.093 0.075 0.061 0.050 0.0400 033 0027 0.013 0.160 0.125 0.099 0.078 0.062 0.049 0.039 0.032 0.025 0.021 0.009 0.140 0.108 0.084 0.065 0.051 0.040 0.031 0.025 0.0200.016 0.006 0.123 0.093 0.0710.054 0.042 0.032 0.025 0.019 0.015 0.012 0.005 0.108 0.080 0.060 0.045 0.034 0.026 0.020 0.015 0.0120.0090.003 0.095 0.069 0.051 0.038 0.028 0.021 0.016 0.012 0.0090.007 0.002 0.083 0.060 0.043 0.031 0.023 0.017 0.012 0.0090.007 0.005 0.002 16 1 8 1 9 Print Done 4 A parts remaining wer Homework: Chapter 21 Homework Save Score: 0 of 4 pts 11 of 12 (10 complete) HW Score: 52.67%, 15.8 of 30 pts P21-35 (similar tal stion Help i Reference - X Max Chips is a ma (Click the icon Present Value of $ Read the requiren Periods 1 2 Requirements 10 Let's begin with the value, and finally for a negative pres 4 5 minal disposal parentheses 00 Present Value of Annuity of $1.00 in Arrears Periods 2% 4% 6% 8% 10% 12% 14% 16% 18% 1 0 .980 0.962 0.943 0.926 0.909 0.893 0.877 0.862 0.847 1.942 1886 1 833 1.783 1736 1.690 16471605 1 566 2.884 2.7752.673 2.577 2.487 2.402 2.322 2.246 2.174 3.808 3.630 3.465 3.312 3.170 3.037 2.914 2.798 2.690 4.713 4.452 4.212 3.993 3.791 3.605 3.433 3.274 3.127 5.601 5.242 4.917 4.623 4.355 4.111 3.8893 .685 3.498 6.472 6.002 5.5825.206 4.868 4.564 4288 4.0393.812 7.325 6.733 6.210 5.747 5.335 4.968 4.639 4.344 4.078 8.162 7435 6.802 6.247 5.759 5.328 4.9464 .607 4303 8.983 8.111 7.360 6.710 6.145 5.650 5.216 4.833 4.494 9.787 8.7607.887 7.139 6.495 5.938 5.453 5.029 4.656 12 10.575 9.3858.384 7.536 6.814 6.194 5.660 5.197 4.793 11.348 9.986 8.853 7.904 7.103 6.424 5.842 5 .342 4.910 12.106 10.563 9.295 8.244 7367 6.628 6.002 5.468 5,008 12.849 11.118 9.712 8.5597.606 6.811 6.142 5.575 5.092 13.578 11.652 10.106 8.851 7.824 6.974 6 2655.668 5.162 17 14.292 12.166 10.477 9.122 8.022 7.120 6.373 5.749 5.222 18 14.992 12.659 10.828 9.372 8.2017.250 6.467 5.818 5.273 19 15.678 13.134 11.158 9.604 8.365 73666.550 5.877 5.316 20% 22% 0.833 0.820 1.528 1 492 2.106 2.042 2.589 2.494 2.991 2.864 3.3263.167 3.605 3.416 3.837 3.619 4.031 3.786 4.1923.923 4.327 4.035 4.4394.127 4.533 4.203 4611 4.265 4.675 4.315 4.730 4.357 4.775 4.391 4.812 4.419 4.843 4.442 24% 26% 0.806 0.794 1457 1424 1.981 1.923 2.404 2.320 2.745 2.635 3.020 2.885 3.242 3.083 3.4213.241 3.566 3.366 3.682 3.465 3.776 3.543 3.851 3.606 3.912 3.656 3.962 3.695 4.0013.726 4.033 3.751 4.059 3.771 4.080 3.786 4.097 3.799 28% 0.781 1 392 1.868 2241 2.532 2.759 2.937 3.076 3.184 3.269 3.335 3.387 3.427 3.459 3.483 3.503 3.518 3.529 3.539 30% 32% 0.769 0.758 1 361 1331 1.816 1.766 2.166 2.096 2.436 2.345 2.643 2.534 2802 2677 2.925 2.786 3.019 2.868 3.092 2.930 3.147 2.978 3.1903.013 3.040 3.2493,061 3.268 3.076 3.283 3.088 3.295 3.097 3.304 3.104 3.311 3.109 40% 0.714 1 224 1.589 1.849 2.035 2.168 2.263 2.331 2.379 2.414 2.438 2.456 2469 2.478 2.484 2.489 2.492 2.494 2.496 3223 Net initial investm After-tax cash fi Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 17 18 19 Enter any number Print Done 4 parts 4 remaining Homework: Chapter 21 Homework Save Score: 0 of 4 pts 11 of 12 (10 complete) HW Score: 52.67%, 15.8 of 30 pts P21-25 Laimniece i Max d - Reference X Presed Read Periods Requit Let's bl value for an Compound Amount of $1.00 (The Future Value of $1.00) Periods 2% 4% 6% 8% 10% 12% 14% 1 1 .020 1.040 1.060 1.080 1.100 1.120 1.140 2 1.040 1.082 1.124 1.166 1.210 1.254 1.300 3 1 061 1.125 1.191 1.260 1.331 1.405 1.482 4 1.082 1.170 1.262 1.360 1.464 1.574 1.689 5 1.104 1.217 1.338 1.469 1.611 1.762 1.925 6 1.126 1.265 1.419 1.587 1.772 1.974 2 195 7 1.149 1.316 1,504 1.714 1.949 2211 2.502 8 1.172 1.369 1.594 1.851 2.144 2.476 2.853 9 1.195 1.423 1.6891.999 2.358 2.7733 252 1219 1.480 1.791 2.159 2594 3.106 3.707 11 1.243 1.5391.898 2.332 2.853 3.4794226 1.268 1.601 2.012 2.518 3.138 3.896 4.818 1 294 1.665 2.133 2.720 3.452 4.363 5.492 14 1.319 1.732 2.261 2.937 3.797 4.887 6261 15 1.346 1.801 2.397 3.172 4.177 5.474 7.138 16 1.373 1.873 2.540 3.426 4.595 6.130 8.137 17 1.400 1.948 2.693 3.700 5.054 6.866 9 276 18 1.428 2.026 2.854 3.996 5.560 7.690 10.575 191.457 2.107 3.026 4.316 6.116 8.613 12.056 16% 18% 20% 1.160 1.180 1.200 1.346 1.392 1.440 1.561 1643 1.728 1.811 1.939 2.074 2.100 2.288 2.488 2.436 2.700 2.986 2.826 3.185 3.583 3.278 3.759 4.300 3.803 4.435 5.160 4.411 5.234 6.1927 5.117 6.176 7.430 5.9367.288 8.916 6.886 8.599 10.699 7.988 10.147 12.839 9.266 11.974 15.407 10.748 14.129 18.488 12.468 16.672 22.186 14.463 19.673 26.623 16.777 2321431.948 22% 1.220 1.488 1816 2215 2.703 3.297 4.023 4.908 5.987 .305 8.912 10.872 13.264 16.182 19.742 24.086 29.384 35,849 43.736 24% 26% 1.240 1.260 1.538 1 588 1.907 2000 2.364 2.520 2932 3.176 3635 4002 4.508 5.042 5.590 6.353 6.931 8.005 8594 10 086 10.657 12.708 13.215 16.012 16.386 20.175 20.319 25.421 25 196 32.030 31.243 40.358 38.741 50.851 48.039 6 4.072 59.568 80.731 28% 30% 1.280 1.300 1.638 1.690 2.097 2. 197 2.684 2.856 3.436 3.713 4.398 4.827 5.629 6.275 7206 8.157 9.223 10.604 11 806 13.786 15.112 17.922 19.343 23 298 24.759 30 288 31 691 39 374 40.565 51.186 51.923 66.542 66.461 86.504 85.071 112.455 108.890146.192 32% 40% 1.320 1.400 1.742 1.960 2.300 2.744 3.036 3.842 4.007 5.378 5.290 7530 6.983 10.541 9.217 14.758 12.166 20.661 16.060 28.925 21,199 40.496 27.983 56.694 36.937 79.371 48.757 111.120 64.359 155 568 84 954 217.795 112.139 304.913 148.024 426 879 195 391 597.630 Net in After 15 16 18 19 Enter al Print Done 4 par Trem! Save Homework: Chapter 21 Homework Score: 0 of 4 pts P21-25. Loimilastal 11 of 12 (10 complete) HW Score: 52.67%, 15.8 of 30 pts - X Max d 0 Reference Presed Read Requit 20% 1.000 2200 3.640 3 5368 Lers by value for and Compound Amount of Annuity of $1.00 in Arrears (Future Value of Annuity) Periods 2% 4% 6% 8% 10% 12% 14% 16% 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2020 2040 2060 2080 2.100 2.120 2.140 2.160 3.060 3.122 3.184 3246 3.310 3.374 3.440 3.506 4.122 4246 4375 4506 4.641 4.779 4.9215.066 5 5.204 5.416 5.637 5.867 6.105 6.353 6.610 6.877 6.308 6.633 6.975 7.336 7.716 8.115 8.536 8.977 7.434 7.898 8.394 8.923 9.487 10.089 10.730 11.414 8.583 9214 9.897 10.637 11.436 12.300 13.233 14.240 9.755 10.583 11.491 12.488 13.579 14.776 16.085 17.519 10 10.950 12.006 13.181 14.487 15.937 17.549 19.337 21.321 11 12.169 13.486 14.972 16.645 18.531 20.655 23.045 25.733 12 13.412 15.026 16.870 18 977 21.384 24 133 27 271 30.850 13 14.680 16.627 18.882 21.495 24.523 28.029 32.089 36.786 14 15.974 18 292 21.015 24 215 27.975 32 393 37.581 43.672 15 17.293 20.024 23.276 27.152 31.772 37 280 43.842 51.660 16 18.639 21.825 25.673 30.324 35.950 42.753 50.980 60.925 17 20.012 23.698 28.213 33.750 40.545 48.884 59.11871.673 18 21.412 25.645 30.906 37.450 45.599 55.750 68.39484.141 18% 1.000 2.180 .572 5215 7.154 9.442 12.142 15.327 19.086 23.521 28.755 34 931 42.219 50.818 60.965 72.939 87,068 103.740 22% 1.000 2.220 3.708 5524 7.740 10.442 13.740 17.762 22670 28.657 35.962 44.874 55.746 69010 85.192 104.935 129.020 158.405 7.442 9.930 12 916 16.499 20.799 25.959 32 150 39.581 48.497 59.196 72.035 87.442 105.931 128.117 24% 1.000 2 240 3.778 5.684 8.048 10.980 14 615 19.123 24 712 31.643 40 238 50 895 64.110 80 496 100.815 126.011 157 253 195.994 26% T283T3043320540% TF 28% 30% 1.000 1.000 1.000 1.000 1.000 2 260 2280 2300 2320 2.400 3.848 3.918 3.990 4,062 4.360 5.848 6.016 6.187 7.104 8 368 8.700 9043 9.398 10.946 11.544 12.136 12.756 13.406 16.324 15.546 16.534 17583 18696 23 853 20.588 22.163 23.858 25.678 34 395 26.940 29 369 32.015 34 895 49.153 34 945 38.593 42.619 47.062 69.814 45.031 50.398 56.405 63.122 98.739 57.739 65.510 74 327 84 320 139 235 73.751 84.853 97.625 112.303 195.929 93.926 109.612 127 913 149 240 275 300 119.347 141.303 167 286 197.997 386.420 151.377 181.868 218.472 262 356 541.988 191.735 233.791 285,014 347.309 759.784 242.585 300 252 371.518 459.449 1064.697 Net in Enteral Print Done 4 part 4 rent