Homework Answers
| A | B | |||
| After-Tax | ||||
| Investment | Cash Flow Effect(s) | Year(s) of | ||
| Aspect | Inflows/(Outflows) | Cash Flow | ||
| 1 | $2,400 | 1 | 2400 | |
| $2,400 | 2 | 2400 | ||
| $2,400 | 3 | 2400 | ||
| 2 | -$46,000 | 0 | -46000 | |
| 3 | $4,800 | 1 | =12000*40% | |
| $6,400 | 2 | =16000*40% | ||
| $2,160 | 3 | =5400*40% | ||
| $1,040 | 4 | =2600*40% | ||
| 4 | $10,750 | 1 | =26875*40% | |
| $21,500 | 2 | =53750*40% | ||
| $21,500 | 3 | =53750*40% | ||
| $21,500 | 4 | =53750*40% | ||
| $10,750 | 5 | =26875*40% | ||
| 5 | $6,480 | 1 | =10800*60% | |
| $6,480 | 2 | =10800*60% | ||
| $6,480 | 3 | =10800*60% | ||
| $6,480 | 4 | =10800*60% | ||
| $6,480 | 5 | =10800*60% | ||
| $6,480 | 6 | =10800*60% | ||
| 6 | $5,400 | 1 | =9000*60% | |
| $5,400 | 3 | =9000*60% | ||
| $5,400 | 5 | =9000*60% | ||
| 7 | $4,200 | 4 | =7000*60% | Profit on sale is $7000 as Tractor is fully depreciated in 4 years. So 40% Tax will be charged on profit. |
| 8 | $23,950 | 4 | =22000+((26875-22000)*40%) | Sale value = $22000, WDV after 4 years= $26875. So Tax saved on loss = 40%(26875-22000) |
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After-Tax Cash Flows Below is a list of aspects of various capital expenditure proposals that the...
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