Hi I need the anwer to this question , not similar. and also the whole answer.thank you
Homework Answers
| a | ||||||||
| 1 | PV of out flow | $8,000 | ||||||
| 2 | After tax inflow | $3,250 | ||||||
| This occurs evenly for 5 years | ||||||||
| Payback period | 2 years 5 Months 15 days | |||||||
| (1/2 gives 2. 46), 0.46 *12 gives 5.52 months | ||||||||
| 3 | NPV@7% | $4,977.24 | ||||||
| Note: The given inflow is after tax | ||||||||
| b | ||||||||
| 1 | PV of out flow | $8,000 | ||||||
| Year 1 | After tax inflow | $1,250 | ||||||
| Year 2 | After tax inflow | $1,950 | ||||||
| Year 3 | After tax inflow | $3,400 | $6,600 | $1,400 (Balance to be recovered in year 4) | ||||
| Year 4 | After tax inflow | $2,950 | $246 | 5.69 | ||||
| Year 5 | After tax inflow | $3,400 | ||||||
| Payback period | 2 years 5 Months 21 days | |||||||
| Until year 3, $6,600 is recovered, balance 1,400 need to be recovered in year 4 and we have sufficient inflow and hence inflow is divided by 12 months to arrive @ per month inflow which is $246 | ||||||||
| $1400/$246 gives 5.7 months. 0.7*30=21 days | ||||||||
| 3 | NPV@7% | $2,169.66 | ||||||
| c | ||||||||
| Year | 0 | 1 | 2 | 3 | 4 | 5 | ||
| 1 | PV of outflow | ($8,000) | ||||||
| 2 | Revenue | $3,750 | $3,750 | $3,750 | $3,750 | $3,750 | ||
| 3 | Depreciation | $1,600 | $1,600 | $1,600 | $1,600 | $1,600 | ||
| 4 | Net inflow | $2,150 | $2,150 | $2,150 | $2,150 | $2,150 | ||
| 5 | After tax inflow | $1,720 | $1,720 | $1,720 | $1,720 | $1,720 | ||
| 6 | Add back depreciation | $3,320 | $3,320 | $3,320 | $3,320 | $3,320 | ||
| (Non Cash outflow) | ||||||||
| Pay Back period | 2.410 | (ie. 2 years 4 months 27 days) | ||||||
| 7 | NPV@7% | $5,245.47 | ||||||
| d | ||||||||
| Year | 0 | 1 | 2 | 3 | 4 | 5 | ||
| 1 | PV of outflow | ($8,000) | ||||||
| 2 | Revenue | $4,900 | $4,900 | $4,900 | $4,900 | $4,900 | ||
| 3 | Rev Expenditure | $1,950 | $1,950 | $1,950 | $1,950 | $1,950 | ||
| 4 | Depreciation | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | ||
| 5 | Net inflow/ Profit | $1,450 | $1,450 | $1,450 | $1,450 | $1,450 | ||
| 6 | After tax inflow | $1,160 | $1,160 | $1,160 | $1,160 | $1,160 | ||
| 7 | Add back depreciation | $2,660 | $2,660 | $2,660 | $2,660 | $2,660 | ||
| (Non Cash outflow) | ||||||||
| 8 | Salvage Value | $0 | $0 | $0 | $0 | $500 | ||
|
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