Income Statement: Sales Variable Costs Contribution Margin Fixed Costs (excluding Depreciation) Depreciation Eamings Before Taxes Taxes Eamings After Taxes \begin{tabular}{|lr|lr|} \hline$ & 500,000 & $ & 500,000 \\ \hline$ & 200,000 & $ & 240,000 \\ \hline$ & 300,000 & $ & 260,000 \\ \hline$ & 100,000 & $ & 120,000 \\ \hline$ & 72,000 & $ & 45,000 \\ \hline$ & 128,000 & $ & 95,000 \\ \hline$ & 44,800 & $ & 33,250 \\ \hline$ & 83,200 & $ & 61,750 \\ \hline \hline \end{tabular} Annual After-Tax Cash Flow Earnings After Taxes Depreciation Annual After-Tax Cash Flow \begin{tabular}{|lr|lr|} \hline$ & 83,200 & $ & 61,750 \\ \hline$ & 72,000 & $ & 45,000 \\ \hline$ & 155,200 & $ & 106,750 \\ \hline \end{tabular} After-Tax Cash Flow For Salvage Value \begin{tabular}{l|rr|rrr} \hline Market Value of Asset at the end of useful life & $ & 100,000 & $ & 40,000 \\ Book Value of Asset at the end of useful life & $ & 80,000 & $ & 60,000 \\ Gain (Loss) & $ & 20,000 & $ & (20,000) \\ Tax on Gain (Loss) & $ & 7,000 & $ & (7,000) \\ \hline Cash from Sale of Asset & $ & & & \\ Tax on Sale & $ & 100,000 & $ & 40,000 \\ Net Cash from Sale of Asset & $ & 7,000 & $ & (7,000) \\ \hline \end{tabular} Investment 1 Annual Cash Flows Year 0 (date of investment) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 \begin{tabular}{|l|} \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \end{tabular} Investment 2 Annual Cash Flows Year 0 (date of investment) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 \begin{tabular}{|} \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \end{tabular} Investment 1 Investment 2 Net Present Value Based on NPV only, which investment is better (Link to List Below)? Investment 1 Investment 2 What interest rate (Link to list below)? Based on IRR only, which investment is better (Link to List Below)? Calculate NET PRESENT VALUE FOR INVESTMENT \#1 ONLY Assuming the following Required Rates of Return 6%12% P Present Value e LOWER the required interest rate, the the Net Present Value (Link to t Below). e HIGHER the required interest rate, the the Net Present Value (Link to Income Statement: Sales Variable Costs Contribution Margin Fixed Costs (excluding Depreciation) Depreciation Eamings Before Taxes Taxes Eamings After Taxes \begin{tabular}{|lr|lr|} \hline$ & 500,000 & $ & 500,000 \\ \hline$ & 200,000 & $ & 240,000 \\ \hline$ & 300,000 & $ & 260,000 \\ \hline$ & 100,000 & $ & 120,000 \\ \hline$ & 72,000 & $ & 45,000 \\ \hline$ & 128,000 & $ & 95,000 \\ \hline$ & 44,800 & $ & 33,250 \\ \hline$ & 83,200 & $ & 61,750 \\ \hline \hline \end{tabular} Annual After-Tax Cash Flow Earnings After Taxes Depreciation Annual After-Tax Cash Flow \begin{tabular}{|lr|lr|} \hline$ & 83,200 & $ & 61,750 \\ \hline$ & 72,000 & $ & 45,000 \\ \hline$ & 155,200 & $ & 106,750 \\ \hline \end{tabular} After-Tax Cash Flow For Salvage Value \begin{tabular}{l|rr|rrr} \hline Market Value of Asset at the end of useful life & $ & 100,000 & $ & 40,000 \\ Book Value of Asset at the end of useful life & $ & 80,000 & $ & 60,000 \\ Gain (Loss) & $ & 20,000 & $ & (20,000) \\ Tax on Gain (Loss) & $ & 7,000 & $ & (7,000) \\ \hline Cash from Sale of Asset & $ & & & \\ Tax on Sale & $ & 100,000 & $ & 40,000 \\ Net Cash from Sale of Asset & $ & 7,000 & $ & (7,000) \\ \hline \end{tabular} Investment 1 Annual Cash Flows Year 0 (date of investment) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 \begin{tabular}{|l|} \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \end{tabular} Investment 2 Annual Cash Flows Year 0 (date of investment) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 \begin{tabular}{|} \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \\ \hline \end{tabular} Investment 1 Investment 2 Net Present Value Based on NPV only, which investment is better (Link to List Below)? Investment 1 Investment 2 What interest rate (Link to list below)? Based on IRR only, which investment is better (Link to List Below)? Calculate NET PRESENT VALUE FOR INVESTMENT \#1 ONLY Assuming the following Required Rates of Return 6%12% P Present Value e LOWER the required interest rate, the the Net Present Value (Link to t Below). e HIGHER the required interest rate, the the Net Present Value (Link to
