Problem A: Compute NPV, IRR, Simple Rate of Return, and Profitability index

Problem B: Using changes only method compute which option is better keep old, or get new

Problem A: Compute: NPV IRR Simple rate of Return Protabili Index Data Set Buy Machine Project life Residual of machine Working capital needed at beginning Saving: # of employees Total compensation each per year Eltect of depreciation on Cash maintenance expense BT yr? & yr4 tax rate Discount rate BT=before tax AT=aFter tax To make BT = AT mutply ET by [17 tax rate], e.g., 30% tax multply by 70% Remember to recapture Salvage and 410,000 Working capital at Project end period 15 years for NPV,IRR, and Simple 00,000 get at end year 0 ignore tax on residual 45,000 get back in last ye ignore tax on WC 3 01,000 this amount is B4 tax EACH-use AT 5 for savings 8 expenses ignore depreciation 25,000 this amount is Bil tax _use AT 5 for savings & expenses 40% need to compute after tax 51, then that 51: times Bil tax as appropriate 11% Problem B Using changes only method, compute which option is better BT=before tax AT=atter tax Keep Old Get New To make BT = AT mutply ET by [1- tax rate], e.g., 30% tax multply by 70% Cost of new 110,000 Refurbishment cost 30,000 convert to AT Annual maintenance 20M 10M 'convert to AT tax rate 30% ' 30% saving with new per year NA 48.1!!! ' Discount rate sale of old now 19,000 This is AT ' Sale of old at project end 11,000 don't consider taxes ' Sale of new at project end don't consider taxes number of years to consider 8 8 end year 4 new machine refurbishment ' extra supplies needed at beginning 30M this is an expense convert to AT 7,000 - at end [last year] 20,000 10,000 7011' 7011 14,000 ' 7,000 {14,000}' 17,000) 40,000 ' T011 ' 33,000