Question

This is the continuation of Problem 12-22. Instead of paying $100,000 cash for the tools, the corporation will pay $20,000 now and borrow the remain- ing $80,000. The depreciation schedule will remain unchanged. The. loan will be repaid by 4 equal end-of-year payments of $25,240. Prepare an expanded cash flow table that takes into account both the special tools and the loan. (a) Compute the after-tax rate of return for the tools, taking into account the $80,000 loan

Answer 1

Solu Hom Give n Onnual instolimen s: 25240 OnnUiH pv-to go oo0 iees ate -th Double declining depse Gio ton ll ba o 50% (4 yes)

9 3 5 100000 o 000 Zoan 30000 30000 35000 40 0 0 000 50000 -95000 -12500 695 10,000 DepyeGio HoM 501 Solvage value pyof in Savoge voue 1562.5 6250 4687-5 28000-12-16 12120-4 315649 6315 13125 3335 33 1446.6 3169.5 G037.5 profit Apator d loct depe Galosl 98000-1216 185.016 16336-413 31 12.5 22000| 2.3 724 128502| 32%-48 683151/ 26SD 4160 4160 24 616 990. 0316 6852650 lco ble oshs p 20000 4160 4160 1424 615 990 033 633s 7.917