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What is the value after tax salvage in year 6? Diltz Farms is considering investing in an automated egg-sorting system to increase production for international

What is the value after tax salvage in year 6?

image text in transcribed Diltz Farms is considering investing in an automated egg-sorting system to increase production for international (web-based) sales of Diltz Farms' products. The new system will c $2554 including installation. It will be fully depreciated in 5 yrs.(straight-line) to zero and generate $255 after-tax gain at the end of the projected period (year 6 ). The initial worki captital will be $255 and will be $512 in year one and increase each year thereafter by 5 percent. Assume that at year 0 , there is no change in working capital. Revenues generated fre the egg-sorter are expected to be $908 in year one, and increase by five percent each year. Expenses are ten percent of revenues. Diltz Farms' cost of capital is 7.7%. Using the discounted cash-flow analysis, should Diltz Farms invest in the machinery? What is the NPV of the egg-sorter project? Asume Tax rate as 35% Identify, the values from the questions for cells C14,C15,C16,C17,C19,C20 and C21. Depreciable Basis = Cost of the Asset - Book Value at the end of its life Sometimes, if we do not have information about Book Value of an asset at the end of its useful life, we might use Salvage Value in those cases to find depreciation

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