.ATCF Analysis: (15 ptos) ACME Inc. is contemplating the purchase of a new caterpillar machine. The machine will co...

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.ATCF Analysis: (15 ptos) ACME Inc. is contemplating the purchase of a new caterpillar machine. The machine will cost $180,00

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Answer 1

Answer #1

Statement showing depreciation

Year	Opening balance	Depreciation rates	Depreciation = 180000*depreciation	Closing balance
1	180000	33.33%	59994	120006
2	120006	44.45%	80010	39996
3	39996	14.81%	26658	13338
4	13338	7.41%	13338	0

Statement showing NPV

Particulars	0	1	2	3	4	5	NPV = Sum of PV
Cost of Machine	-180000
Savings in labour		60000	60000	60000	60000	60000
Savings in Material		30000	30000	30000	30000	30000
Depreciation		59994	80010	26658	13338
PBT		30006	9990	63342	76662	90000
Tax @ 40%		12002.4	3996	25336.8	30664.8	36000
PAT		18003.6	5994	38005.2	45997.2	54000
Add: Deprecaition		59994	80010	26658	13338	0
Annual cash flow		77997.6	86004	64663.2	59335.2	54000
Salvage value (40000-tax rate) =40000(0.6) =24000						24000
Total Cash flow	-180000	77997.6	86004	64663.2	59335.2	78000
PVIF @ 10%	1.0000	0.9091	0.8264	0.7513	0.6830	0.6209
PV= Total Cash flow*PVIF	-180000	70906.91	71077.69	48582.42	40526.74	48431.86	99525.61745

a) Net profit for first year = 18004$

b) Annual cash flow for 5 years

Particulars	1	2	3	4	5

Savings in labour	60000	60000	60000	60000	60000
Savings in Material	30000	30000	30000	30000	30000
Before tax Cash flow	90000	90000	90000	90000	90000

c) ATCF

Year	Before tax Cash flow	Depreciation	PBT	Tax @ 40%	PAT	Add: Depreciation	Annual cash flow
1	90000	59994	30006	12002.4	18003.6	59994	77997.6
2	90000	80010	9990	3996	5994	80010	86004
3	90000	26658	63342	25336.8	38005.2	26658	64663.2
4	90000	13338	76662	30664.8	45997.2	13338	59335.2
5	90000		90000	36000	54000	0	54000

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