Final Exam F Microsoft E HomeInsertPage LayoutFormulas Data Review View s Cut 1
ID: 2794752 • Letter: F
Question
Final Exam F Microsoft E HomeInsertPage LayoutFormulas Data Review View s Cut 1 Copy B 1 -li - 0 ,-- da Merge & Center. $ % , isa 8 C l. Insert Delete Format Paste Conditional Format Cell Formatting, as Table Styles Format Painter I U a Sort & Find & 2 Clear Filter Select Ed ting Clipboard Alignment Cells The firm's tax rate is 40% and the after-tax MARR is 8%. Annual Maintenance 13 Year Old forklift New forklift 1 400 $ 2 $ 600 $ 3 $ 800 $ 1,000 $ -10 1,400 $ 15 17 What is the equivalent annual after-tax value associated with purchasing a new lift versus keeping the old lift? 21 25 26 27 28 29 31 32 35 1 Overview /01 O2 Q ^ I..-11 its ENG 10.29 AM 12/2/2017Explanation / Answer
New lift:
Old lift:
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Initial investment Annual cash flows 50 50 50 50 50 50 50 50 50 50 Cost - 50 50 50 50 50 50 50 50 50 50 Tax benefit@ 40% (20) (20) (20) (20) (20) (20) (20) (20) (20) (20) Net cash flow 30 30 30 30 30 30 30 30 30 30 Discount rate@ 8.00% 1.0000 0.9259 0.8573 0.7938 0.7350 0.6806 0.6302 0.5835 0.5403 0.5002 0.4632 Discounted cash flow - 27.78 25.72 23.81 22.05 20.42 18.91 17.50 16.21 15.01 13.90 NPV a 201.30 Annuity factor(10years,8%) b 6.7101 Equivalent annual value c=a/b 30.00Related Questions
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