INTRODUCTION TO MANAGEMENT ACCOUNTING 165 Problem 11-B3 Name Section Big Fish Games BC 5 Data Input Section: $ 400,000 130,000 80,000 40% 14% 10% 25.000 7 Cost of equipment 8 Annual pretax cash inflows 9 Annual depreciation, straight-line 10 Tax rate 11 Desired rate of return, part 1 12 Desired rate of return, part 3 13 Useful life 14 Disposal value in year 5 part 2 15 Output Section 16 Part 1 17 Present value of pretax cash inflows 18 Present value of depreciation savings of income taxes 19 Total after-tax effect on cash 20 Less initial investment 21 Net present value 22 Should equipment be acquired? 23 24 Part 2 25 After-tax impact of disposal on cash 26 Net present value from above 27 Net present value 28 Should equipment be acquired? Formula 1 Formula 2 Formula 3 VALUE! Formula 4 Formula 5 Formula 6 Formula 30 Part 3 31 Present value of pretax cash inflows 32 Present value of depreciation savings of income taxes 33 Total after-tax effect on cash 34 Less initial investment 35 Nel present value 36 Should equipment be acquired? Formal VALUE! 37 End of