The following data have been collected: First cost = $120,000 to be borrowed at 9% interest with only interest paid each year and the principal due in a lump sum at end of year 2. Economic service life (project life) = 6 years. Estimated selling price in year-O dollars = $15,000. Depreciation = five-year MACRS property. Marginal income tax rate = 25% (remains constant). Annual revenue = $145,000 (today's dollars). Annual expense (not including depreciation and interest) = $82,000 (today's dollars). Market interest rate = 18%. . . . 3 5 7 10 15 20 Class Depreciation rate Year n 200% 200% 200% 200% 150% 150% 1 2 33.33 44.45 14.81 7.41 3 20.00 32.00 19.20 11.52 11.52 4 14.29 24.49 17.49 12.49 8.93 8.92 8.93 4.46 5 3.750 7.219 6.677 6.177 5.713 5.285 4.888 4.522 5.76 10.00 18.00 14.40 11.52 9.22 7.37 6.55 6.55 6.56 6.55 3.28 6 7 5.00 9.50 8.55 7.70 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 8 9 4.462 10 11 12 13 14 15 16 17 18 19 20 21 Year to switch from declining balance to straight line 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 Hugh Health Product Corporation is considering purchasing a computer system to control plant packaging for a spectrum of health products. Click the icon to view the additional data. Click the icon to view the MACRS depreciation schedules for personal properties. Click the icon to view the interest factors for discrete compounding when i = 18% per year. (a) With an average general inflation rate of 5% expected during the project period (which will affect all revenues, expenses, and the salvage value of the computer), determine the cash flows in actual dollars. Fill in the table below. (Round to one decimal place.) Year Net After-Tax Cash Flow $thousand 0 1 $thousand 2 $thousand The following data have been collected: First cost = $120,000 to be borrowed at 9% interest with only interest paid each year and the principal due in a lump sum at end of year 2. Economic service life (project life) = 6 years. Estimated selling price in year-O dollars = $15,000. Depreciation = five-year MACRS property. Marginal income tax rate = 25% (remains constant). Annual revenue = $145,000 (today's dollars). Annual expense (not including depreciation and interest) = $82,000 (today's dollars). Market interest rate = 18%. . . . 3 5 7 10 15 20 Class Depreciation rate Year n 200% 200% 200% 200% 150% 150% 1 2 33.33 44.45 14.81 7.41 3 20.00 32.00 19.20 11.52 11.52 4 14.29 24.49 17.49 12.49 8.93 8.92 8.93 4.46 5 3.750 7.219 6.677 6.177 5.713 5.285 4.888 4.522 5.76 10.00 18.00 14.40 11.52 9.22 7.37 6.55 6.55 6.56 6.55 3.28 6 7 5.00 9.50 8.55 7.70 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 8 9 4.462 10 11 12 13 14 15 16 17 18 19 20 21 Year to switch from declining balance to straight line 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 Hugh Health Product Corporation is considering purchasing a computer system to control plant packaging for a spectrum of health products. Click the icon to view the additional data. Click the icon to view the MACRS depreciation schedules for personal properties. Click the icon to view the interest factors for discrete compounding when i = 18% per year. (a) With an average general inflation rate of 5% expected during the project period (which will affect all revenues, expenses, and the salvage value of the computer), determine the cash flows in actual dollars. Fill in the table below. (Round to one decimal place.) Year Net After-Tax Cash Flow $thousand 0 1 $thousand 2 $thousand
