Integrative: Determining net cash flows Atlantic Drydock is replacing an existing hoist and is considering one of two newer, more efficient pieces of equipment. The existing hoist is 3 years old, cost $33,000, and is being depreciated under MACRS using a 5-year recovery period. Although the existing hoist has only 3 years (years 4, 5, and 6) of depreciation remaining under MACRS, it has a remaining usable life of 5 years. Hoist A, one of the two possible replacement hoists, costs $39,100 to purchase and $8,200 to install. It has a 5-year usable life and will be depreciated under MACRS using a 5-year recovery period. Hoist B costs $54,500 to purchase and $6,400 to install. It also has a 5-year usable life and will be depreciated under MACRS using a 5-year recovery period. Increased investments in net working capital will accompany the decision to acquire hoist A or hoist B. Purchase of hoist A would result in a $4,300 increase in net working capital; hoist B would result in a $6,200 increase in net working capital. The projected earnings before depreciation interest , and taxes with each alternative hoist and the existing hoist are given in the following table : The existing hoist can currently be sold for $18,000 and will not incur any removal or cleanup costs. At the end of 5 years, the existing hoist can be sold to net $1,500 before taxes. Hoists A and B can be sold to net $11,600 and $20,300 before taxes, respectively, at the end of the 5-year period (see MACRS table :). The firm is subject to a 21% tax rate. a. Calculate the initial cash flow associated with each alternative. b. Calculate the periodic cash flows associated with each alternative. (Note: Be sure to consider the depreciation in year 6.) c. Calculate the terminal cash flow at the end of year 5 associated with each alternative. d. Depict on a time line the net cash flows associated with each alternative a. Calculate the initial cash flow associated with each alternative Help me solve this View an example Get more help Continue H Type here to search gi > w 31C Mostly cloudy A) ENG 12:39 PM 24/11/2021 Integrative: Determining net cash flows Atlantic Drydock is replacing an existing hoist and is considering one of two newer, more efficient pieces of equipment. The existing hoist is 3 years old, cost $33,000, and is being depreciated under MACRS using a 5-year recovery period. Although the existing hoist has only 3 years (vears 4.5, and 6) of depreciation remaining under MACRS, it has a remaining usable life of 5 years. Hoist A, one of the two possible replacement hoists, costs $39,100 to purchase d. Hoist B costs $54,500 to purchase and $6,400 to install. It also has a 5-year usable life and will be depreci X decision to acquire hoist A or hoist B. Purchase of hoist A would result in a $4,300 increase in net working capital Data table st and taxes with each alternative hoist and the existing hoist are given in the following table : The existing hoist can currently be sold for $18,000 and taxes. Hoists A and B can be sold to net $11,600 and $20,300 before taxes, respectively, at the end of the 5-ye (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) a. Calculate the initial cash flow associated with each alte b. Calculate the periodic cash flows associated with each Earnings before c. Calculate the terminal cash flow at the end of year 5 a depreciation, interest, and taxes d. Depict on a time line the net cash flows associated with Year With hoist A With hoist B With existing hoist $21,000 $21,000 $14.500 a. Calculate the initial cash flow associated with each alt 2 21,000 22,500 14,500 3 21,000 24,600 14.500 4 21,000 14,500 5 21,000 24,600 14.500 1 24,600 Print Done Help me solve this View an example Get more help Continue - Data table years old, cost $33,000, and is being able life of 5 years. Hoist A, one of the two sts $54,500 to purchase and $6,400 to acquire hoist A or hoist B. Purchase of hoist with each alternative hoist and the existing Integrative: Determining net cash flows depreciated under MACRS using a 5-year re possible replacement hoists, costs $39,100 install. It also has a 5-year usable life and wil A would result in a 54,300 increase in net wa hoist are given in the following table : The existing hoist can currently be sold for 5 $20,300 before taxes, respectively, at the en a. Calculate the initial cash flow associated b. Calculate the periodic cash flows associat c. Calculate the terminal cash flow at the end d. Depict on a time line the net cash flows as s A and B can be sold to net $11,600 and 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 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify 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 a. Calculate the initial cash flow associated v Print Done Help me solve this View an elupe Continue Integrative: Determining net cash flows Atlantic Drydock is replacing an existing hoist and is considering one of two newer, more efficient pieces of equipment. The existing hoist is 3 years old, cost $33,000, and is being depreciated under MACRS using a 5-year recovery period. Although the existing hoist has only 3 years (years 4, 5, and 6) of depreciation remaining under MACRS, it has a remaining usable life of 5 years. Hoist A, one of the two possible replacement hoists, costs $39,100 to purchase and $8,200 to install. It has a 5-year usable life and will be depreciated under MACRS using a 5-year recovery period. Hoist B costs $54,500 to purchase and $6,400 to install. It also has a 5-year usable life and will be depreciated under MACRS using a 5-year recovery period. Increased investments in net working capital will accompany the decision to acquire hoist A or hoist B. Purchase of hoist A would result in a $4,300 increase in net working capital; hoist B would result in a $6,200 increase in net working capital. The projected earnings before depreciation interest , and taxes with each alternative hoist and the existing hoist are given in the following table : The existing hoist can currently be sold for $18,000 and will not incur any removal or cleanup costs. At the end of 5 years, the existing hoist can be sold to net $1,500 before taxes. Hoists A and B can be sold to net $11,600 and $20,300 before taxes, respectively, at the end of the 5-year period (see MACRS table :). The firm is subject to a 21% tax rate. a. Calculate the initial cash flow associated with each alternative. b. Calculate the periodic cash flows associated with each alternative. (Note: Be sure to consider the depreciation in year 6.) c. Calculate the terminal cash flow at the end of year 5 associated with each alternative. d. Depict on a time line the net cash flows associated with each alternative a. Calculate the initial cash flow associated with each alternative Help me solve this View an example Get more help Continue H Type here to search gi > w 31C Mostly cloudy A) ENG 12:39 PM 24/11/2021 Integrative: Determining net cash flows Atlantic Drydock is replacing an existing hoist and is considering one of two newer, more efficient pieces of equipment. The existing hoist is 3 years old, cost $33,000, and is being depreciated under MACRS using a 5-year recovery period. Although the existing hoist has only 3 years (vears 4.5, and 6) of depreciation remaining under MACRS, it has a remaining usable life of 5 years. Hoist A, one of the two possible replacement hoists, costs $39,100 to purchase d. Hoist B costs $54,500 to purchase and $6,400 to install. It also has a 5-year usable life and will be depreci X decision to acquire hoist A or hoist B. Purchase of hoist A would result in a $4,300 increase in net working capital Data table st and taxes with each alternative hoist and the existing hoist are given in the following table : The existing hoist can currently be sold for $18,000 and taxes. Hoists A and B can be sold to net $11,600 and $20,300 before taxes, respectively, at the end of the 5-ye (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) a. Calculate the initial cash flow associated with each alte b. Calculate the periodic cash flows associated with each Earnings before c. Calculate the terminal cash flow at the end of year 5 a depreciation, interest, and taxes d. Depict on a time line the net cash flows associated with Year With hoist A With hoist B With existing hoist $21,000 $21,000 $14.500 a. Calculate the initial cash flow associated with each alt 2 21,000 22,500 14,500 3 21,000 24,600 14.500 4 21,000 14,500 5 21,000 24,600 14.500 1 24,600 Print Done Help me solve this View an example Get more help Continue - Data table years old, cost $33,000, and is being able life of 5 years. Hoist A, one of the two sts $54,500 to purchase and $6,400 to acquire hoist A or hoist B. Purchase of hoist with each alternative hoist and the existing Integrative: Determining net cash flows depreciated under MACRS using a 5-year re possible replacement hoists, costs $39,100 install. It also has a 5-year usable life and wil A would result in a 54,300 increase in net wa hoist are given in the following table : The existing hoist can currently be sold for 5 $20,300 before taxes, respectively, at the en a. Calculate the initial cash flow associated b. Calculate the periodic cash flows associat c. Calculate the terminal cash flow at the end d. Depict on a time line the net cash flows as s A and B can be sold to net $11,600 and 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 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify 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 a. Calculate the initial cash flow associated v Print Done Help me solve this View an elupe Continue