CDEF 0.38 0.1 TaxableIncome Year BTCF Depreciation Income Taxes ATCF - _ - 0 -18

Question

CDEF 0.38 0.1 TaxableIncome Year BTCF Depreciation Income Taxes ATCF - _ - 0 -180,000 136,000 236,000 336,000 436,000 5 36,000 6 36,000 7 36,000 -180000 -180000 0 36,000 32727.27273 57600 -21,600820844,208 36535.53719 345601,440547.2 35,453 26636.21337 20736 15,264 -5800.3230,200 20626.78779 2073615,2645800.32 30,200 18751.62526 10368 25,632 -9740.1626,260 14822.99509 036,000-13680 22,320 11453.6892 0 36,000 -13680 22,320 10412.44473 0 36,000 -13680 22,320 9465.858842 0 36,000 1368022,320 8605.32622 030,000 11400 18,600 7171.105183 10 12 13 14 8 36,0003 936,000 10 36,000 10 30,000 16 17 PW- 17208.8556 181 1.). When the MARR is changed from 10% to 20% the alternative is still economically acceptable? 19 a. true b.false 2012 when the MARR is changed from 10% to 5% the alternative is still economically acceptable? 21 a.true b. false 22 3.) In this example the depreciation charge helped to paid less taxes? 23 a.true b.false 24 4.)The higher the interest rate or MARR the less profitable is the alternative? 25 a.true b.false 26

Explanation / Answer

1. false as NPV gone to negative

2. True as NPV increased from the 10% NPV

3.True

4.False, as the MARR acts as the required rate which is expected by the shareholders it the required rate increases the NPV will be reduced and can also go to negative,which makes project non viable

Year ATCF Disc fac @ 10% Dsc cash flow Disc fac @ 20% Dsc cash flow Disc fac @ 5% Dsc cash flow 0 -180000 1 -180000 1 -180000.00 1 -180000 1 36000 0.91 32727.27 0.83 30000.00 0.95 34285.71 2 44208 0.83 36535.54 0.69 30700.00 0.91 40097.96 3 35453 0.75 26636.36 0.58 20516.78 0.86 30625.63 4 30200 0.68 20627.01 0.48 14564.04 0.82 24845.61 5 30200 0.62 18751.82 0.40 12136.70 0.78 23662.49 6 26260 0.56 14823.09 0.33 8794.42 0.75 19595.62 7 22320 0.51 11453.69 0.28 6229.10 0.71 15862.41 8 22320 0.47 10412.44 0.23 5190.92 0.68 15107.05 9 22320 0.42 9465.86 0.19 4325.77 0.64 14387.67 10 22320 0.39 8605.33 0.16 3604.80 0.61 13702.54 10 18600 0.39 7171.11 0.16 3004.00 0.61 11418.79 NPV 17209.51 NPV -40933.46 NPV 63591.49

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