Question

10 Problem 12-15 Project Cash Flows (LG12-5) Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully-depreciated vans, which you think you can sell for $4.900 apiece and which you could probably use for another 2 years if you chose not to replace them The NV vans will cost $48,000 each in the configuration you olnts want them, and can be depreciated using MACRS over a 5-year life. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $5,600 each. If your cost of capital is 10 percent and your firm faces a 30 percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount) selerences Year

Answer 1

1 YEARS 2 cost of new van 3 MACRS RATES 11.52% 20.00% 32.00% 19.20% 11.50% 5.76% 5 Before tax cost savin 6 less depreciation 7 EBIT 8 | less tax 30% 9 net income 10 add depreciation 11 Operating cash flow 5600 5600 15360 -9760 2928 -6832 8528 5600 9216 3616 1084.8 2531.2 6684.8 5600 5529.6 70.4 21.12 49.28 5578.88 5600 5600 2764.8 2835.2 850.56 1984.64 4749.44 5520 24 6800 5576 13 cost of new machine sale value of 14 old machinelafter tax 15 16 | PVF @ 10% 3430 44570 0.91 6,181.82 0.83 7,047.93 0.75 0.68 0.62 0.56 2,680.94 3,810.45 5,022.39 3,462.26 PV OF INFLOW 28,2 OUTFLOW NPV 18 19 44,570.00 16,364.22 21 22 5 VANS CASH FLOW 23 YEAR 24 OUTLFOW 25 INFLOW 26 | PVF @ 10% 27 PF OF CASH FLOW 222850 23747.2 0.56 13,404.68 27880 0.62 222,850.00 30,909.0935,239.67 25,111.9519,052.2517,311.29 42640 33424 27894.4 0.68 0.91 0.83 0.75 29 NPV 81,821.08

1 YEARS 2 cost of new van 3 MACRS RATES 0.115 0.2 0.32 0.192 0.1152 0.0576 5 Before tax cost savin 6 less depreciation 7 EBIT 8 | less tax 30% 9 net income 10 add depreciation 11 Operating cash flow 5600 5600 5600 5600 5600 5600 +82 13 cost of new machine sale value of 14 old machine(after tax) -4900 0.7 B13-B14 -+C16/1.1D16/1.1E16/1.1 F16/1.1G16/1.1 計D16"D101計E16"E10-+F16"F10-+G16"G101計H16"H10 16|PVF @ 10% -+C16 C10 SUM(C17:H17 +815 18 19 20 21 22 5 VANS CASH FLOW 23 YEAR 24 OUTLFOW 25 INFLOW 26 PVF @ 10% 27 PF OF CASH FLOW 28 29 NPV PV OF INFLOW OUTFLOW NPV -+C19-C18 -c19% C10-5 -+G16 «Η 16 計E16 -+D16 +F16 +824"B26 -+C26 C25 -SUM(B27:H27)
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