Question

A potential investment requires an initial cash outlay of $660,000 and has a useful life of 11 years. Annual cash receipts from the investment are expected to be $220,000. The salvage value of the Investment is expected to be $70,000. The company's tax rate is 35%. The entire initial cash outlay (without any reduction for salvage value) will be depreciated over 11 years. Assume a discount rate of 19% Show your Excel input and calculated net present value after-tax. (If a variable is not used in the calculation, Input a zero (6). Omit the "S" and "%" signs in your response. Round answers to the nearest dollar and use a minus sign - ) for negative numbers.) Excel Input Rate 19% Nper 220000 $1 PMT PV $11578 95 FV $70000 Net present value 54421 Required: Show your Excel input and calculated internal rate of return after-tax. (If a variable is not used in the calculation, input a zer (0). Omit the "S" and "%" signs in your response. Round answers to the nearest dollar / whole number and use a minus sign (-) for negative numbers.) Required: Show your Excel input and calculated internal rate of return after-tax. (If a variable is not used in the calculation, Input a zero (O). Omit the "S" and "%" signs in your response. Round answers to the nearest dollar / whole number and use a minus sign (-) for negative numbers.) Excel / calculator input: Rate 19% Nper PMT $ 220000 PV $ 0 FV $ Internal Rate of Return (IRR) 32 2 (Ctr W Brittany's address

Answer 1

Excel Input Nper Rate 19% 11 PMT $ 2,20,000 PV $ 6,60,000 FV $ 70,000 Net Present Value $ 82,500 NPV Year Cash Flows Depreciation TAX35% Cash Flows After Tax Derpreciation PV Factor PV of Cash Flows Cash flows after Depreciation -660000 160000 160000 0 -660000 1 -660000 220000 220000 -60000 600001 600001 104000 104000 104000 164000 164000 -60000 1 2 3 4 5 -60000 -660000 137815 115811 97320 81782 68724 160000 600001 164000 220000 220000 220000 -60000 56000 56000 56000 56000 56000 56000 56000 160000 104000 60000 0.840 0.706 0.593 0.499 0.419 0.352) 0.296 164000 -60000 160000 104000 164000 60000 60000 220000 -60000 104000 164000 57751 -60000 104000 60000 164000 48531 6 7 8 9 160000 160000 160000 160000 60000 0.249 40782 -60000 -60000 60000 0.209 220000 220000 220000 220000 220000 70000 104000 104000 104000 104000 -60000 56000 56000 56000 56000 24500 34271 28799 10 11 11 160000 160000 0.176 164000 164000 164000 164000 45500 60000 600001 -60000 24201 0.148 0.148 0 70000 45500 0 6714 NPV 82500 Excel Input Rate Nper PMT 19% 11 $ 2,20,000 $ 6,60,000 $ 70,000 $ PV FV IRR 82,500 IRR 22.303% Year Cash Flows Depreciation TAX35% Cash Flows After Tax Derpreciation Cash flows after Depreciation -660000 Cash Flows PV Factor @22.303 PV of Cash Flows 0 -660000 -660000 1 -660000 1 -60000 160000 104000 60000 164000 134093 220000 220000 560001 56000 0.818 0.669 2 -60000 160000 104000 109640 164000 164000 3 220000 -60000 160000 56000 104000 0.547 0.447) 89646 73299 4 220000 -60000 160000 104000 164000 5 -60000 160000 104000 59932 164000 164000 60000 600001 60000 60000 60000 600001 60000 60000 6 160000 104000 49003 220000 220000 220000 220000 220000 56000 56000 56000 56000 560001 56000 7 160000 -60000 -60000 -60000 -600001 104000 164000 164000 0.365 0.299 0.244 0.200 0.163 8 9 160000 160000 160000 104000 104000 104000 164000 40067 32760 26786 21901 17908 10 220000 -60000 56000 0.134 60000 600001 164000 164000 220000 -60000 160000 56000 104000 0.109 11 11 70000 0 70000 24500 45500 0 45500 0.109 4965 IRR 0