Question

Objective This activity has the purpose of helping students use the Microsoft Excel software to compute the after tax cash flow and perform a sensitivity analysis. (Objective 3) Student Instructions Read example 7-15 to be used to compute the after tax present worth. Retrieved from textbook example 7-15 Computing After Tax Present Worth of and Asset (Sullivan W., Wicks E., and Patrick C.), page 341 Certain new machinery when placed in service is estimated to cost $180,000. It is expected to reduce net annual operating expenses by $36,000 per year for 10 years and to have a $30,000 MV at the end of the 10th year. Develop the ATCF and BTCFs Use the MACRS depreciation method, five years property class. The MARR is 10% and the tax rate is 38% 0.38 MARR year BTCF Depreciation Taxable Income Income Taxes ATCF PW 180,000 36,000 36,000 36,000 36,000 36,000 36,000 36,000 36,000 3600 30,000 36,000 57,600 34,560 20,736 20,736 10,368 21,600 1,440 15.264 15.264 25,632 36,000 36,000 36,000 36,000 30,000 80000 -180000.00 0 36,000 3272727 8208 44208 36535 54 547.2 35,45326636 21 -5800 32 30200 20626 79 -5800.32 30.200 18751.63 9740.16 26260 1482300 13680 22 320 11453.69 13680 223201041244 13680 22,320 946586 13680 22320 860533 10 10 11400 18,6007171.1 PW 17208.86 1. Have available the Microsoft Excel software program. 2 Construct a table in the Microsoft Excel work sheet as shown above. The instructions are shown in the second table 3. The construction of the Microsoft Excel sheets and the answered questions has a total grading value of 4. The deadline for hand in this exercise is indicated at the end of the week of the ninth module

Answer 1

1. No, as the present worth is now negative.

2. True, as the present worth is still greater than the cost.

3. Yes, because the taxes are being calculated on the amount that is smaller due to deduction of depreciation thereby reducing the taxes.

4. Yes, as can be seen from 1 & 2.

Homeert Page Layout FormulasData Review View s Cut ta copy ▼ E AutoSum 10A A ー E " ゴWrap Text B 1 프 . 灬. a-Δ. 逻锂函Merge & Center, 됐, % , 弼騽 Conditional Format CeInsert Delete Format Formatting, as Table-styles, , ψ Sort &Find & 2 ClearFe Select Edting Format Painter Clipboard Alignment Number Cells N24 0.38 year BTCF Depreciatic Taxable InIncome Ta ATCF 0.05 PW 0 -180000 136000 2 36000 3 36000 4 36000 5 36000 6 36000 7 36000 8 36000 9 36000 0 36000 10 30000 180000 -180000 0 36000 34285.71 57600 -21600 8208 44208 40097.96 1440 -547.2 35452.8 30625.46 20736 5264 -5800.32 30199.68 24845.35 20736 5264 -5800.32 30199.68 23662 24 0368 25632 -9740.16 26259.84 19595.5 0 36000 -13680 22320 15862.41 0 36000 13680 22320 15107.05 0 36000 13680 22320 14387.67 0 36000 13680 22320 13702 54 0 30000 -11400 18600 11418.79 12 13 15 16 17 63590.69 19 21 24 4Sheet1 Ready 100% 01:46 O Type here to search ผู้เ ENG 19-03-2018 0 8

Homeert Page Layout FormulasData Review View 10A A ー E " ゴWrap Text aCopy B 1 프 . 灬. a-Δ. 逻锂函Merge & Center, 됐, % , 弼騽 Conditional Format CeInsert Delete Format Formatting▼ as Table-styles ▼ ▼ ▼ Sort &Find & 2 ClearFe Select Edting Format Painter Clipboard Alignment Number Cells 0.38 year BTCF Depreciatic Taxable InIncome Ta ATCF 0.2 PW 0 -180000 136000 2 36000 3 36000 4 36000 5 36000 6 36000 7 36000 8 36000 9 36000 0 36000 10 30000 180000 -180000 0 36000 30000 600 -21600 8208 44208 30700 1440 -547.2 35452.8 20516.67 20736 5264 -5800.32 30199.68 14563.89 20736 5264 -5800.32 30199.68 12136.57 0368 25632 -9740.16 26259.84 8794.367 0 36000 -13680 22320 6229.102 0 36000 13680 22320 5190.919 0 36000 13680 22320 4325.766 0 36000 13680 223203604.805 0 30000 -11400 18600 3004.004 12 13 15 16 17 PW= 40933.9 19 21 4Sheet1 Ready 福 10096 01:47 O Type here to search ENG 19-03-2018 0