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Tax 30% Book value (BV) After Tax Cash Flow income An opportunity Project A, lasting 4 years, requires to buy an asset with initial cost
Tax 30% Book value (BV) After Tax Cash Flow income An opportunity Project A, lasting 4 years, requires to buy an asset with initial cost P = $9,000. MARR = 15%. (a - 10 pts) Fill up the empty cells in the table using a 3-yr MACRS depreciation method (see tables). Assume a 30% tax rate on the taxable income (disregard blackened cells] Year Pre Tax 3-yr MACRS Taxable Cash Flow Depreciation -9,000 4,000 5,000 2.000 4 5.000 (6-5 pts) What is the After Tax PW(@MARR) of this project? [Show calculations (c-5 pts) Another opportunity Project B has the following After Tax Cash Flow, which project would you choose among A and B? Why? Year 0 2 3 0 Project B After Tax Cash Flow -9,000 4,200 1.800 3,000 5.500 2 3 (d - 5 pts) If you could, would you invest in the other Project too? Why? (e-5 pts) If an inflation rate f = 3%/year is expected for the future, what would be the After Tax deflated (real) IRR of Project A? (f-5 pts) What is the After Tax Payback Period of this project? [Use whole number] Tax 30% Book value (BV) After Tax Cash Flow income An opportunity Project A, lasting 4 years, requires to buy an asset with initial cost P = $9,000. MARR = 15%. (a - 10 pts) Fill up the empty cells in the table using a 3-yr MACRS depreciation method (see tables). Assume a 30% tax rate on the taxable income (disregard blackened cells] Year Pre Tax 3-yr MACRS Taxable Cash Flow Depreciation -9,000 4,000 5,000 2.000 4 5.000 (6-5 pts) What is the After Tax PW(@MARR) of this project? [Show calculations (c-5 pts) Another opportunity Project B has the following After Tax Cash Flow, which project would you choose among A and B? Why? Year 0 2 3 0 Project B After Tax Cash Flow -9,000 4,200 1.800 3,000 5.500 2 3 (d - 5 pts) If you could, would you invest in the other Project too? Why? (e-5 pts) If an inflation rate f = 3%/year is expected for the future, what would be the After Tax deflated (real) IRR of Project A? (f-5 pts) What is the After Tax Payback Period of this project? [Use whole number]
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