FIN 370 Week 4 Calculating Cash Flow problem set

 

Data:
Cost of Capital (borrowing)
Cost of Automobile
Cost of additional equiment atached to tu
Tax rate
Annual Before Tax Cash flows

Project
12.00%
$200,000
$15,000
35%

Year-1

Year-2

Year-3

Year-4

Year-5

Year-6

Year-7

Year-8

$70,000

Process Area:
Cash Outflows
Cost of Equipment
Total Investment Outlays

$65,000

$60,000

$55,000

$50,000

$40,000

20.0%

Depreciaiton Rate (MACRS)

$70,000

Given in problem
Given in problem
Given in problem
Given in problem
$30,000 Given in problem

32.0%

19.2%

11.5%

11.5%

5.8%

0.0%

0.0% Given in problem

Year – 0
$215,000
$215,000

Cash Inflows:
Net Operating Cash flows
Depreciation
Earnings before interest and taxes
Taxes
Earning after taxes
Add Depreciation
Net Operating Cash flows

Year-0

Given in problem
Given in problem
Year-1

Year-2

Year-3

Year-4

Year-5

Year-6

Year-7

Year-8
Take cash flows from years 0-8 (including initial outlay)
Initial investment X depreciation rate
Cash flows minus depreciation
Earnings X tax rate
Earnings before taxes minus taxes
Add depreciation from line 21
Earning after taxes + depreciation

Pay Back Period

0

0

0

0

0

0

0

0

0
Pay Back Period divided by Net Operating Cash Flows

Discounted Operating Cash flows

Decision Criteria:
Pay Back Period
Discounted Pay Back Period
Net Present Value
Internal Rate of Return
Profitability Index

0
0

>8 Years
>8 Years

0
0
#DIV/0!

Years
Years
$0.00 = Reject
Err:523
Err:523
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#DIV/0!

0
0
#DIV/0!

0
0
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0
0
#DIV/0!

0
0
#DIV/0!

0
0
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0
0
#DIV/0!

0
0
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