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This company has the following project alternatives, and company data Company Data Company WACC (discount rate) 9% Company Tax Rate 21% Example Project Data Alternative
This company has the following project alternatives, and company data | |||||||||||||||
Company Data | |||||||||||||||
Company WACC (discount rate) | |||||||||||||||
Company Tax Rate | Example | ||||||||||||||
Project Data | Alternative 1 | Alternative 2 | Alternative 3 | Alternative 4 | After-Tax Salvage Cash Flow | ||||||||||
Project Type | Independent | Ending Book Value | MV - BV if positive would be a capital gain. | ||||||||||||
Equipment for project at t=0 | Ending Market Val. | Capital Gain would mean tax is owed. | |||||||||||||
Installation costs at t=0 | BV - MB | Company would have cash inflow of the MV and outflow of taxes | |||||||||||||
Net Working Cap. Initial Investment* | *At the end of the project all NWC borrowed from the firm will be returned to the firm (recouped) | The net would be the A.T. Salvage CF | |||||||||||||
Initial Sales | A.T. Salvage CF | Hint: MV + ( (BV-MB) *Tax Rate) | |||||||||||||
Annual Sales Growth Rates | |||||||||||||||
Annual Variable costs as a % of Sales | |||||||||||||||
Annual Fixed Costs | |||||||||||||||
Project life | |||||||||||||||
Method of Depreciation | MACRS | ||||||||||||||
Expected Life of Equipment | |||||||||||||||
Market Value at t=T | |||||||||||||||
Salvage Value at t=T | n.a. |
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*please show excel formulas
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