Fin 370 Week 4 Calculating Cash Flow Problem Set

FIN 370 Week 4 Calculating Cash Flow problem set
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Data:
Cost of Capital (borrowing)
Cost of Automobile
Cost of additional equiment atached to tu
Tax rate
Annual Before Tax Cash flows
→
Project
12.00%
$200,000
$15,000
35%
Year-1
Year-2
Year-3
Year-4
Year-5
Year-6
Year-7
Year-8
$70,000
Process Area:
Cash Outflows
Cost of Equipment
Total Investment Outlays
$65,000
$60,000
$55,000
$50,000
$40,000
20.0%
Depreciaiton Rate (MACRS)
$70,000
Given in problem
Given in problem
Given in problem
Given in problem
$30,000 Given in problem
32.0%
19.2%
11.5%
11.5%
5.8%
0.0%
0.0% Given in problem
Year – 0
$215,000
$215,000
Cash Inflows:
Net Operating Cash flows
Depreciation
Earnings before interest and taxes
Taxes
Earning after taxes
Add Depreciation
Net Operating Cash flows
Year-0
Given in problem
Given in problem
Year-1
Year-2
Year-3
Year-4
Year-5
Year-6
Year-7
Year-8
Take cash flows from years 0-8 (including initial outlay)
Initial investment X depreciation rate
Cash flows minus depreciation
Earnings X tax rate
Earnings before taxes minus taxes
Add depreciation from line 21
Earning after taxes + depreciation
Pay Back Period
0
0
0
0
0
0
0
0
0
Pay Back Period divided by Net Operating Cash Flows
Discounted Operating Cash flows
Decision Criteria:
Pay Back Period
Discounted Pay Back Period
Net Present Value
Internal Rate of Return
Profitability Index
0
0
>8 Years
>8 Years
0
0
#DIV/0!
Years
Years
$0.00 = Reject
Err:523
Err:523
#DIV/0!
#DIV/0!
0
0
#DIV/0!
0
0
#DIV/0!
0
0
#DIV/0!
0
0
#DIV/0!
0
0
#DIV/0!
0
0
#DIV/0!
0
0
#DIV/0!