Question

Question 14 5 pts RHPS Company is considering the purchase of a new machine. The new machine falls into the MACRS 3-year class, has an estimated life of 3 years, it costs $100,000 and RHPS plans to sell the machine at the end of the third year for $20,000. The new machine is expected to generate new sales of $30,000 per year and added costs of $10,000 per year. In addition, the company will need to decrease inventory by $10,000 and accounts payable will increase by $10,000 too. The company's tax rate is 20 percent. (Numbers in parentheses are negative) What would be the cash flow from assets (CFFA) at time period 0 (t-0)? MACRS Class Year Зуг 5yr 1 33.33% 20.00% 14.29% 2 44.45% 32.00% 24.49% 3 14.81% 19.20% 17,49% 4 7.41% 11.52% 12.49% 5 11.52% 8.93% 6 5.76% 8.92% 7 8.93% 8 4.46% ($129.000) ($ 80,000) ($120.000) ($124.000) ($100.000) 7yr

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

ANS 1 = CFFA 0 = SEE OPERATING CASH FLOW LINE, YEAR 0 COLUMN

ANS 2 = OCF 1 = SEE OPERATING CASH FLOW, YEAR 1 COLUMN

ANS 3 = CFFA 3 = SEE NET CASH FLOW LINE, YEAR 3 COLUMN

H w x o la Tx B: ENG 02:36 01-08-2020 166 34 AH476 AB AC AD AE AF AG AH Al AJ AK AL COST MACRS YEAR 1 2 3 100000 DEPRECIATION 33.33 33330.00 44.45 44450.00 14.81 14810.00 7.41 7410.00 BOOK VALUE 66670.00 22220.00 7410.00 0.00 4 1 2 3 0 -100000 20000 476 477 478 479 480 481 482 483 484 485 486 487 488 489 490 491 492 493 494 495 496 497 30000 YEAR COST OF FIXED ASSETS WORKING CAPITAL [10000 + 10000) SALES COSTS DEPRECIATION EARNINGS BEFORE TAX TAXES NET INCOME DEPRECIATION OPERATING CASH FLOW RECOVERY WORKING CAPITAL AFTER TAX SALVAGE NET CASH FLOW 10000 33330.00 -13330.00 -2666.00 -10664.00 33330.00 22666.00 30000 10000 44450.00 -24450.00 -4890.00 -19560.00 44450.00 30000 10000 14810.00 5190.00 1038.00 4152.00 14810.00 18962.00 -20000 17482 (SEE NOTE BELOW 16444.00 -80000 24890.00 -80000 22666.00 24890.00 498 499 con Ml-np-ir BETA LEVERED NPV CCA REPLACEMENT BOND OPTION TO WAIT STEIN indiffEPS EBIT OCF 1 LEASE SLM MACRS GOLFI... →

H w x o la Tx B: ENG 02:38 01-08-2020 166 34 AD517 Jx AB AC AD AE AF AG AH Al AJ AK AL 500 501 502 NOTE 503 504 CALCULATION OF AFTER TAX SALVAGE SALVAGE VALUE BOOK VALUE PROFIT ON SALE TAX ON PROFIT ON SALE AFTER TAX SALVAGE 20000 7410.00 12590.00 2518 17482 ANSWERS ANS 1 ANS 2 ANS 3 -80000 22666 16444 505 506 507 508 509 510 511 512 513 514 515 516 5171 518 519 520 521 522 523 ... Mi-np-ir BETA LEVERED NPV CCA REPLACEMENT BOND OPTION TO WAIT STEIN indiffEPS EBIT OCF 1 LEASE SLM MACRS GOLFI... →