Homework: HW #16- Chapter 11A Save Score: 0.65 of 12 pts 6 of 6 (3 complete) HW Score: 13.78%, 5.65 of 41 p P11-11 (similar to) Question Help Operating cash inflows Afimis considering renewing its equipment to meet increased demand for its product. The cost of equipment modifications is $182 million plus 5111,000 in installation costs. The firm will depreciate the equipment modifications under MACRS, using a 5-year recovery period (see table Additional sales revenue from the renewal should amount to $125 milion per year and additional operating expenses and other costs (excluding depreciation and interest) will amount to 38% of the additional sales. The firm s subject to a tax rate of 40% (Note Answer the following questions for each of the next 6 years) a. What incremental earnings before depreciation Interest, and taxes will result from the renewal? b. What incrementat net operating profits after taxes will result from the renewal? c. What incremental operating cash inflows will result from the renewal? Profit before depreciation and taxes S 775,000 Depreciation $ 386.200 Not profit before taxes $ 388 800 Taxes $ 155,520 Not profiter taxes 5 233 280 (Round to the nearest dollar) $ Year Profit before depreciation and taxes Depreciation Net profit before taxes Taxes 3 2 775,000 346750 426250 170500 S 5 Net profta for taxes Enter any number in the edit fields and then click Check Answer 10 parts remaining Cew All Final Check omework: HW #16- Chapter 11A re: 0.65 of 12 pts 6 of 6 (3 complete) HW Score: 10 P11-11 (similar to) Data Table -X dific table n an: Derating cash is $111,000 venue from thi 38% of the ad What increme .What increme . What increme Profit before Depreciatio Net profit Taxes Net profit of (Click on the icon here in order to copy the contents of the data table below into a spreadsheet) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 Totals 100% 100% 100% 100% "These percentages have been rounded to the nearest whole percent to simplity calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half year convention (Round to the ne Year Profit befor Depreciatio Net prolit Taxes Net profita Enter any numb Print Done Clear All 10 Pemaining Final
