Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I started it on Excel.... I'm a bit lost and unsure of what to do. Please help (with explanation? preferably with Excel) Problems 13 In

image text in transcribedI started it on Excel.... I'm a bit lost and unsure of what to do. Please help (with explanation? preferably with Excel)

Problems 13 In the previous problem, suppose the fixed asset actually H. Cochran, Inc., is considering a new three-year expansion project that qualifies for 100 percent bonus depreciation. All the other requires an initial fixed asset investment of $2.15 million. The fixed asset facts are the same. What is the project's Year i net cash flow will be depreciated straight-line to zero over its three-year tax life, after now? Year 2? Year 3? What is the new NPV? which time it will be worthless. The project is estimated to generate $2.23 million in annual sales, with costs of $1.25 million. If the tax rate is 23 percent, what is the OCF for this project? cash flow = fixed assets + net working cap cash flow yr ( 4200000 Fixed assets 3.75 estimated lit 3 years annual sales 3.07 op income annual sales - annual cost - bonus dep -2190000 cost 1.51 0.21 tax rate req rate 0.1 op cash flow op income b4 tax * 1-tax rate + dep 5480100 - 1730100 nwc 0.45 1730100 5480100 Op Income Cash Flow op cash flow = (annual sales - annual cost) x (1-tax rate) 1560000 0.79 Year 4.20 1232400 for year 2 Year 1 -2.19 5.4801 year 3 year 3 op income annual sales - annual cost - bonus dep 1560000 1232400 2136650 =yr 3 Year 2 1.2324 Year 3 after tax salvage value = salvage val (1-tax rate) 454250 cash flow 4200000 Year o $2,376,837.27 Year 1 5480100 Year 2 1232400 Year 3 2136650

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions

Question

What characterises your dealings with other people?

Answered: 1 week ago