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I am having trouble figuring this out. Can you please assist in checking and completing Frank Smith Plumbing Data Needed for analysis: Year-1 Year-2 Project
I am having trouble figuring this out. Can you please assist in checking and completing
Frank Smith Plumbing Data Needed for analysis: Year-1 Year-2 Project Cost of Capital (borrowing) 12.00% Cost of Truck $200,000 Cost of additional equiment attached to truck $15,000 Tax rate 35% Annual Before Tax & Depreciation Truck Projected Earnings $70,000 $70,000 Depreciation Percentage Rate (MACRS)* 20.0% 32.0% * The proposed truck has an estimated economic life of seven years but will be treated as a five-year MACRS property Calculate the following -- light yellow highlighted cells need to be co Year-0 Annual Before Tax & Depreciation Truck Projected Earnings Depreciation Expense Annual Before Tax Truck Projected Earnings Tax Annual Projected Truck Earnings Depreciation to add back Year-1 $70,000.00 14,000.00 70,000.00 24,500.00 Year-2 $70,000.00 22,400.00 70,000.00 24,500.00 14,000.00 22,400.00 Projected Truck Net Cash Flow Decision Criteria: Pay Back Period Discounted Pay Back Period (DPB)** Net Present Value Internal Rate of Return Profitability Index Years Years Discounted Cash Flow Needed for DPB Calc. Recommendations: Explain why limited leverage is good for business. Based on the given information, tax rate, and depreciation show the profitability of the project so that Stephanie can convi mith Plumbing ded for analysis: Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 $65,000 $60,000 $55,000 $50,000 $40,000 $30,000 19.2% 11.5% 11.5% 5.8% ed as a five-year MACRS property for depreciation purposes. 0.0% 0.0% ow highlighted cells need to be completed Year-3 $65,000.00 12,480.00 65,000.00 22,750.00 Year-4 $60,000.00 6,900.00 60,000.00 21,000.00 Year-5 $55,000.00 6,325.00 55,000.00 19,250.00 Year-6 $50,000.00 2,900.00 50,000.00 17,500.00 Year-7 $40,000.00 0.00 40,000.00 14,000.00 Year-8 $30,000.00 0.00 30,000.00 10,500.00 12,480.00 6,900.00 6,325.00 2,900.00 0.00 0.00 sion Criteria: when it goes from a negative to positive mmendations: project so that Stephanie can convince her father to purchase the truck by borrowing money. from a negative to positive / cashflowStep by Step Solution
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