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Table 1 Year MACRS Depreciation Book Value 1 33% 221,100 448,900 2 45 301,500 147,400 3 15 100,500 46,900 4 7 46,900 0 100 670,000
Year | MACRS | Depreciation | Book Value |
---|---|---|---|
1 | 33% | 221,100 | 448,900 |
2 | 45 | 301,500 | 147,400 |
3 | 15 | 100,500 | 46,900 |
4 | 7 | 46,900 | 0 |
100 | 670,000 |
See years 1 and 4 as examples in Table 1. In year 1, 3 X 425,000 = 1,275,000 637,500 221,100 20,000 = 396,400 158,560 = 237,840 + 221,100 = 458,940 = project NCF = after tax, end-of-year cash inflows, CFt. In year 4, 3 X 425,000 = 1,275,000 637,500 46,900 20,000 = 570,600 228,240 = 342,360 + 46,900 = 389,260.
Should the project be undertaken? Fill in X's
Y 0 | Y 1 | Y 2 | Y 3 | Y 4 | |
---|---|---|---|---|---|
Unit Price | $3 | X | X | $3 | |
Unit Sales | 425,000 | x | x | 425,000 | |
Revenues | 1,275,000 | X | X | 1,275,000 | |
Operating Costs | 637,500 | X | X | 637,500 | |
Depreciation | 221,100 | X | X | 46,900 | |
Other Project Effects | 20,000 | X | X | 20,000 | |
Before tax income | 396,400 | X | X | 570,600 | |
Taxes | 158,560 | X | X | 228,240 | |
Net Income | 237,840 | X | X | 342,360 | |
Plus Depreciation | 221,100 | X | X | 46,900 | |
Net Op Cash Flow | 458,940 | X | X | 389,260 | |
Salvage Value | 100,000 | ||||
SV Tax | X | ||||
Recovery of NWC | X | ||||
Termination CF | X | ||||
Project NCF | X | X | X | X | X |
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