You have purchased a house for $430,000 and taken a loan that is to
be repaid in 180 equal monthly payments beginning next month (15 year loan). The interest rate charged is 0.35% monthly. What are your monthly payments?
You are analyzing the prospects of installing cost saving machinery. You have the following information:
Every year the machine generates costs savings (before taxes) of an amount $60,000.
The cost of the machinery is 160,000.
The machinery will be depreciated “straight line” for tax purposes over 5 years. That is the depreciation for tax purposes per year will be the price of the machinery divided by 5.
The machinery will occupy space that would otherwise have been rented for $10,000 a year (before taxes are deducted).
The tax rate is 36%.
What will be the increase in taxes per year from installing the machinery? (Your answer should be a positive number.)
For this question start fresh, do not carry over data from earlier
questions. You are analyzing the prospects of installing cost saving machinery. You have the following information:
-The machine costs $80,000. Depreciation is calculated straight line (equal amounts) over 4 years.
-Every year the machine increases cash flows by an amount 38,000. (Taxes, Opportunity Cost etc. have all been accounted for in this number. There is no Net Working Capital.)
-After 3 years (when the machine has only been depreciated for 3 years and therefore the book value is not zero) the machine is sold for $30,000. This, therefore, is a 3 year project.
-The rate of discount is 8%
-The tax rate is 36%.
-(Hint: Here you have to consider the income due to the salvage sale of the machinery and the taxes on this sale.)What is the NPV of installing the machinery?
This question will require you to use Excel’s IRR function. A firm
invests $200,000 in a project today. It receives $20,000 a year from now, $50,000 two years from now, and $195,000 three years from now and nothing more. What is the IRR of the project?
The format of Excel’s IRR function is =IRR(aX:aY,Z)
Where aX:aY are cells aX to aY which have cash flows entered into them. The initial investment is a negative cash flow so it should have a negative sign.
Z is a “guess” IRR, usually you can set to 0.1 (which is 10%).
Answer should be a number given as a %. That is, for example 3.18% should be answered as 3.18 rather than 3.18% or 0.0318
Since 2010, we have offered professional writing services to clients all over the world.
Over the years, our writers have gained solid experience in all academic disciplines, giving them a competitive edge to provide only first-rate academic papers.
Hi there! Chat/Order through WhatsApp.