Homework Answers
| Question 10: | |
| (Sales less costs)*(1-t) = (30000-1000)*80% = | $ 23,200 |
| Depreciation tax shield = 100000*14.29%*20% = | $ 2,858 |
| OCF in year 1 | $ 26,058 |
| Question 11: | |
| (Sales less costs)*(1-t) = (30000-1000)*80% = | $ 23,200 |
| Depreciation tax shield = 100000*8.92%*20% = | $ 1,784 |
| Recapture of NWC | $ 4,000 |
| After tax salvage value = 10000+(13390-10000)*20% = | $ 10,678 |
| CFFA at t = 6 | $ 39,662 |
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