# 5555

Classified in Mathematics

Written at on English with a size of 3.51 KB.

1) OCF = (S – C)(1 – t) + Tc Depreciation

OCF = [(\$5 × 1,900) – (\$2.20 × 1,900)](1 – 0.34) + 0.34(\$12,000/5)

OCF = \$4,327.20

NPV = –\$12,000 + \$4,327.20(PVIFA14%,5)   = \$2,855.63

 Y 1 Y 2 Y 3 Y 4 Sales 8,500 9,000 9,500 7000 Cost 1,900 2,000 2,200 1,700 Dep. 4,000 4,000 4,000 4,000 EBT 2,600 3,000 3,300 1,300 Tax 884 1,020 1,122 442 Net Income 1,716 1,980 2,178 858 Ocf 5,716 5,980 6,178 4,858 Cpital spending -16,000 Nwc -200 -200 -300 -250 950 Cash flow -16,200 5,466 5,680 5,978 5,808

NPV = –\$16,200 + \$5,466 / 1.12 + \$5,680 / 1.122 + \$5,978 / 1.123 + \$5,808 / 1.124  = \$1,154.53

3)OCF = (\$2,050,000 – 950,000)(1 – 0.35) + 0.35(\$2,400,000/3) = \$995,000

NPV = –\$2,400,000 + \$995,000(PVIFA12%,3) = –10,177.89

 Year cash flow 0 – \$2,685,000  = –\$2,400,000 – 285,000 1 995,000 2 995,000 3 ,426,250 = \$995,000 + 285,000 + 225,000 + (0 – 225,000)(.35)

NPV = –\$2,685,000 + \$995,000(PVIFA12%,2) + (\$1,426,250 / 1.123 )   = \$11,777.34