UE A43 X B E H D 3 Fill out the cells and answer the questions. 4 5. A firm plan to purchase a machine cost $35,000 6 Tax Rate 21% 7 1st Year Sale $8,000 8 Annual Earning Growth 10% 9 Useable Life 5 Years 10 Salvage Value 0 11 Depreciation Method Straight line 12 13 14 15 16 17 a. Fill out the cells for calculating Cash Flow (Straight line depreciation) 10 pts 18 Year 0 2 3 19 Depreciation Rate 20.00% 20.00% 20.00% 20.00% 20 Earnings before depreciation and taxes (EBITDA) 8,000 8,800 9,680 10,648 21 Depreciation 22 Earnings before taxes 23 Tax 24 Net operating profit after tax problem Problem Problem 4 Problem 5 5 20.00% 11,713 B E G D a. Fill out the cells for calculating Cash Flow (Straight line depreciation) 10 pts Year 0 2 Depreciation Rate 20.00% 20.00% Earnings before depreciation and taxes (EBITDA) 8,000 8,800 Depreciation Earnings before taxes 3 20.00% 9,680 4 20.00% 10,648 5 20.00% 11,713 Tax Net operating profit after tax Capital investment (no salvage value) Add back depreciation Free cash flow ($35,000) -35,000 Discount rate 10.00% b. NPV 5pts C. IRR 5pts d. Should the firm purchase this machine? Why? Problem 1-must answer first Instruction Problem 2 Problem 3 Problem 4 Problem 5 5 pts - E. Bonus Question: Given all the uncertainties of the economy and the business, the company try to conduct a sensitivity analysis base ond 2 Hintiuse datatable Possible Annual Earning NPV Growth Rate 4 5 23 6 4% 6% 8% 10% 0 129 1 14% 2 16% 3 1896 4 2096 B business, the company try to conduct a sensitivity analysis base on different annal growth rate of earnings. What would be the NPV for the listed growth rate below