Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Using Excel please help solve Present worth(PW) and Annual worth(AW) for this investment. The Greentree Lumber Company is attempting to evaluate the profitability of adding

image text in transcribedimage text in transcribedimage text in transcribed

Using Excel please help solve Present worth(PW) and Annual worth(AW) for this investment.

The Greentree Lumber Company is attempting to evaluate the profitability of adding another cutting line to its present sawmill operations. They would need to purchase two more acres of land for $32,000 (total). The equipment would cost $138,000 and could be depreciated over a five-year recovery period with the MACRS method. Gross revenue is expected to be $50,000 per year for five years, and operating expenses will be $14,000 annually for five years. It is expected that this cutting line will be closed down after five years. The firm's effective income tax rate is 49%. If the company's after-tax MARR is 4% per year, is this a profitable investment? Assume that land recovered at original cost of $32,000 at the end of five years. The market value of equipment is negligible at the end of year 5. GDS Recovery Rates (rk) Year 5-year Property Class 1 0.2000 2 0.3200 3 0.1920 4 0.1152 5 0.1152 6 0.0576 N 1 Discrete Compounding; i = 4% Single Payment Uniform Series Compound Compound Sinking Amount Present Amount Present Fund Factor Worth Factor Factor Worth Factor Factor To Find F To Find P To Find F To Find P To Find A Given P Given F Given A Given A Given F FIP PIF FIA PIA AIF 1.0400 0.9615 1.0000 0.9615 1.0000 1.0816 0.9246 2.0400 1.8861 0.4902 1.1249 0.8890 3.1216 2.7751 0.3203 1.1699 0.8548 4.2465 3.6299 0.2355 1.2167 0.8219 5.4163 4.4518 0.1846 1.2653 0.7903 6.6330 5.2421 0.1508 1.3159 0.7599 7.8983 6.0021 0.1266 1.3686 0.7307 9.2142 6.7327 0.1085 1.4233 0.7026 10.5828 7.4353 0.0945 1.4802 0.6756 12.0061 8.1109 0.0833 2 Capital Recovery Factor To Find A Given P AIP 1.0400 0.5302 0.3603 0.2755 0.2246 0.1908 0.1666 0.1485 0.1345 0.1233 3 4 5 6 7 8 9 10

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Basic Finance An Introduction to Financial Institutions Investments and Management

Authors: Herbert B. Mayo

10th edition

1111820635, 978-1111820633

More Books

Students also viewed these Finance questions

Question

Compute a 75% Chebyshev interval centered on the mean.

Answered: 1 week ago