MACRS Fixed Annual Expense Percentages by Recovery Class Year 3-Year 5-Year 7-Year 10-Year...
MACRS Fixed Annual Expense Percentages by Recovery Class
|
Year |
3-Year |
5-Year |
7-Year |
10-Year |
|
|
1 |
33.33% |
20.00% |
14.29% |
10.00% |
|
|
2 |
44.45% |
32.00% |
24.49% |
18.00% |
|
|
3 |
14.81% |
19.20% |
17.49% |
14.40% |
|
|
4 |
7.41% |
11.52% |
12.49% |
11.52% |
|
|
5 |
11.52% |
8.93% |
9.22% |
||
|
6 |
5.76% |
8.93% |
7.37% |
||
|
7 |
8.93% |
6.55% |
|||
|
8 |
4.45% |
6.55% |
|||
|
9 |
6.55% |
||||
|
10 |
6.55% |
||||
|
11 |
3.28% |
NPV. Mathews Mining Company is looking at a project that has the following forecasted sales: first-year sales are 7,000 units, and sales will grow at 12% over the next four years (a five-year project). The price of the product will start at $126.00 per unit and will increase each year at 66%. The production costs are expected to be 63% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $1,450,000. It will be depreciated using MACRS, and has a seven-year MACRS life classification. Fixed costs will be $55,000 per year. Mathews Mining has a tax rate of 30%. What is the operating cash flow for this project over these five years? Find the NPV of the project for Mathews Mining if the manufacturing equipment can be sold for $80,000 at the end of the five-year project and the cost of capital for this project is 14%.
What is the operating cash flow for this project in year 1? $_______ (Round to the nearest dollar.)
What is the operating cash flow for this project in year 2? $________ (Round to the nearest dollar.)
What is the operating cash flow for this project in year 3? $_________ (Round to the nearest dollar.)
What is the operating cash flow for this project in year 4? $__________ (Round to the nearest dollar.)
What is the operating cash flow for this project in year 5? $__________ (Round to the nearest dollar.)
What is the after-tax cash flow of the project at disposal? $__________ (Round to the nearest dollar.)
What is the NPV of the project? $_________(Round to the nearest dollar.)
Homework Answers
Statement showing depreciation
| Year | Opening balance | Depreciation rate | Depreciation = 1450000*Depreciation rates | Closing balance |
| 1 | 1,450,000 | 14.29% | 207205 | 1,242,795 |
| 2 | 1,242,795 | 24.49% | 355105 | 887,690 |
| 3 | 887,690 | 17.49% | 253605 | 634,085 |
| 4 | 634,085 | 12.49% | 181105 | 452,980 |
| 5 | 452,980 | 8.93% | 129485 | 323,495 |
| 6 | 323,495 | 8.92% | 129340 | 194,155 |
| 7 | 194,155 | 8.93% | 129485 | 64,670 |
| 8 | 64,670 | 4.46% | 64670 | 0 |
Statement showing NPV
| Particulars | 0 | 1 | 2 | 3 | 4 | 5 | NPV = Sum of PV |
| Cost of equipment | -1450000 | ||||||
| Sales in unit | 7000 | 7840 | 8781 | 9834 | 11015 | ||
| Sales price per unit | 126 | 209 | 347 | 576 | 957 | ||
| Total sales | 882000 | 1639814 | 3048743 | 5668223 | 10538360 | ||
| Production cost @ 63% of sales | 555660 | 1033083 | 1920708 | 3570980 | 6639167 | ||
| Fixed cost | 55000 | 55000 | 55000 | 55000 | 55000 | ||
| Deprecition | 207205 | 355105 | 253605 | 181105 | 129485 | ||
| PBT | 64135 | 196626 | 819430 | 1861137 | 3714708 | ||
| Tax @ 30% | 19241 | 58988 | 245829 | 558341 | 1114412 | ||
| PAT | 44895 | 137638 | 573601 | 1302796 | 2600296 | ||
| Add: Deprecition | 207205 | 355105 | 253605 | 181105 | 129485 | ||
| Annual cash flow | 252100 | 492743 | 827206 | 1483901 | 2729781 | ||
|
Salvage value = 80000+30%(323495-80000) =80000+30%(243495) =80000+73048.5 =153048.5 |
153049 | ||||||
| Total cash flow | -1450000 | 252100 | 492743 | 827206 | 1483901 | 2882829 | |
| PVIF @ 14% | 1 | 0.8772 | 0.7695 | 0.6750 | 0.5921 | 0.5194 | |
| PV = Total cash flow*PVIF | -1450000 | 221140 | 379150 | 558340 | 878589 | 1497251 | 2084470 |
Thus
Operating cash flow at year 1 =252100$
Operating cash flow at year 2 = 492743$
Operating cash flow at year 3 = 827206$
Operating cash flow at year 4=1483901$
Operating cash flow at year 5 = 2729781$
NPV = 2084470$
Add Answer to:
MACRS Fixed Annual Expense Percentages by Recovery Class Year 3-Year 5-Year 7-Year 10-Year...
MACR Year 3-Year 5-Year 7-Year 10-Year 1 33.33% 20.00% 14.29% 10.00% 2 44.45% 32.00% 24.49% 18.00% ...
MACR Year 3-Year 5-Year 7-Year 10-Year 1 33.33% 20.00% 14.29% 10.00% 2 44.45% 32.00% 24.49% 18.00% 3 14.81% 19.20% 17.49% 14.40% 4 7.41% 11.52% 12.49% 11.52% 5 11.52% 8.93% 9.22% 6 5.76% 8.93% 7.37% 7 8.93% 6.55% 8 4.45% 6.55% 9 6.55% 10 6.55% 11 3.28% Project cash flow and NPV. The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds (1957 replicas). The necessary foundry equipment will cost a total of $3,900,000 and will be depreciated...
7. NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales...
7. NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 35,000, with an annu. growth rate of 4.00% over the next ten years. The sales price per unit will start at $44.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,400,000. It will be...
NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity...
NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 30,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $45.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,100,000. It will be depreciated...
SITA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable...
SITA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable production costs are 60% of sales. The project lasts 10 years. The equipment needed for the project costs $500,000, will be depreciated using MACRS method and has a 5-year MACRS classification (table below). There are no other costs. The tax rate is 20%. Year 3-Year 33.33% 44.45% 14.81% 7.41% 5-Year 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% RBO VOU AWN 7-Year 14.29% 24.49% 17.49% 12.49%...
SITA Corp. is looking for a project that has annual forecasted sales of $400,000. The variable...
SITA Corp. is looking for a project that has annual forecasted sales of $400,000. The variable production costs are 60% of sales. The project lasts 10 years. The equipment needed for the project costs $300,000, will be depreciated using MACRS method and has a 5-year MACRS classification (table below). There are no other costs. The tax rate is 20%. Year 1 3-Year 33.33% 44.45% 14.81% 7.41% ovanown 5-Year 7-Year 20.00% 14.29% 32.00% 24.49% 19.20% 17.49% 11.52% 12.49% 11.52% 8.93% 5.76%...
TISA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable...
TISA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable production costs are 60% of sales. The project lasts ten years. The equipment needed for the project costs $500,000, will be depreciated using MACRS method and has a 5-year MACRS classification (table below). There are no other costs. The tax rate is 30% Year 3-year 5-year 7-year 10-year 1 33.33 20.00 14.29 10.00 2 44.45 32.00 24.49 18.00 3 14.81 19.20 17.49 14.40 4...
TISA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable...
TISA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable production costs are 70% of sales. The project lasts 10 years. The equipment needed for the project costs $500,000, will be depreciated using MACRS method and has a 5-year MACRS classification (table below). There are no other costs. The tax rate is 30%. Year 3-Year 33.33% 44.45% 14.81% 7.41% 5-Year 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 7-Year 10-Year 14.29% 10.00% 24.49% 18.00% 17.49% 14.40%...
NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity...
NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 33,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $43.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,200,000. It will be depreciated...
same question just three pictures so they are not blurry 7. NPV. Miglietti Restaurants is looking...
same question just three pictures so they are not blurry
7. NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 35,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $42.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have...
P10-20 (similar to) Question Help Project cash flow and NPV. The managers of Classic Autos Incorporated...
P10-20 (similar to) Question Help Project cash flow and NPV. The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds (1957 replicas). The necessary foundry equipment will cost a total of $3,900,000 and will be depreciated using a five-year MACRS life, . The sales manager has an estimate for the sale of the classic Thunderbirds. The annual sales volume will be as follows: Year one: 260 Year two: 300 Year three: 360 Year four: 380 Year five: 330 If...
7. NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 35,000, with an annu. growth rate of 4.00% over the next ten years. The sales price per unit will start at $44.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,400,000. It will be...
NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 30,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $45.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,100,000. It will be depreciated...
SITA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable production costs are 60% of sales. The project lasts 10 years. The equipment needed for the project costs $500,000, will be depreciated using MACRS method and has a 5-year MACRS classification (table below). There are no other costs. The tax rate is 20%. Year 3-Year 33.33% 44.45% 14.81% 7.41% 5-Year 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% RBO VOU AWN 7-Year 14.29% 24.49% 17.49% 12.49%...
SITA Corp. is looking for a project that has annual forecasted sales of $400,000. The variable production costs are 60% of sales. The project lasts 10 years. The equipment needed for the project costs $300,000, will be depreciated using MACRS method and has a 5-year MACRS classification (table below). There are no other costs. The tax rate is 20%. Year 1 3-Year 33.33% 44.45% 14.81% 7.41% ovanown 5-Year 7-Year 20.00% 14.29% 32.00% 24.49% 19.20% 17.49% 11.52% 12.49% 11.52% 8.93% 5.76%...
TISA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable production costs are 70% of sales. The project lasts 10 years. The equipment needed for the project costs $500,000, will be depreciated using MACRS method and has a 5-year MACRS classification (table below). There are no other costs. The tax rate is 30%. Year 3-Year 33.33% 44.45% 14.81% 7.41% 5-Year 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 7-Year 10-Year 14.29% 10.00% 24.49% 18.00% 17.49% 14.40%...
NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 33,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $43.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,200,000. It will be depreciated...
same question just three pictures so they are not blurry
7. NPV. Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 35,000, with an annual growth rate of 4.00% over the next ten years. The sales price per unit will start at $42.00 and will grow at 2.00% per year. The production costs are expected to be 55% of the current year's sales price. The manufacturing equipment to aid this project will have...
P10-20 (similar to) Question Help Project cash flow and NPV. The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds (1957 replicas). The necessary foundry equipment will cost a total of $3,900,000 and will be depreciated using a five-year MACRS life, . The sales manager has an estimate for the sale of the classic Thunderbirds. The annual sales volume will be as follows: Year one: 260 Year two: 300 Year three: 360 Year four: 380 Year five: 330 If...
Most questions answered within 3 hours.
-
Calculate whether loci A&B are in linkage disequilibrium
(D) using the following data. Is the haplotype...
asked 4 minutes ago -
Barrington Box Enterprises has two divisions, large and small,
that share the common costs of the...
asked 7 minutes ago -
An integer number is said to be a perfect number if it is equal
to the...
asked 19 minutes ago -
What does economies of scale often fail to measure? How would
you recommend addressing this limitation?
asked 18 minutes ago -
Joanne Quick made an investment of $18,787.14. From this
investment, she will receive $2,000 annually for...
asked 26 minutes ago -
Enter your answer in the provided box. The solubility of CO2 in
water at 25°C and...
asked 32 minutes ago -
Amazon as with other ecommerce retailers struggle with cross
border solutions and continue to be country...
asked 31 minutes ago -
A second baseman tosses the ball to the first baseman, who
catches it at the same...
asked 48 minutes ago -
An object rests flat on a tablecloth, which is on top of a
table. Suppose you...
asked 48 minutes ago -
Which of the following will most likely occur as the result of
an unanticipated increase in...
asked 44 minutes ago -
Adria Lopez, owner of Success Systems, decides to prepare a
statement of cash flows for her...
asked 1 hour ago -
The reach and involvement of the federal government, in terms of
its role in disaster relief,...
asked 1 hour ago