Financial management paper 2
Randy19
CLA1Template.xlsxA
| Year | Investment A | Investment B | ||
| 0 | ($5,000,000) | ($5,000,000) | Opportunity cost | 12% |
| 1 | $1,500,000 | $1,250,000 | ||
| 2 | $1,500,000 | $1,250,000 | ||
| 3 | $1,500,000 | $1,250,000 | ||
| 4 | $1,500,000 | $1,250,000 | ||
| 5 | $1,500,000 | $1,250,000 | ||
| 6 | $1,500,000 | $1,250,000 | ||
| 7 | $2,000,000 | $1,250,000 | ||
| 8 | 0 | $1,600,000 | ||
| Payback | ||||
| NPV | ||||
| IRR | ||||
| PI |
C_Information
| Year | 1 | 2 | 3 | 4 |
| IRS 3-year Depreciation rates | 33.33% | 44.45% | 14.81% | 7.41% |
| Depreciation expense | ||||
C-Solution
| Year | 0 | 1 | 2 | 3 | 4 |
| Sale quantity | |||||
| Unit price | |||||
| Sale revenue | |||||
| Fixed costs | |||||
| Variable costs | |||||
| Depreciation expense | |||||
| EBIT | |||||
| Tax expense (38%) | |||||
| Net income | |||||
| Operating cash flow (EBIT+Dep-Tax) | |||||
| After tax cash from salvage value | |||||
| After tax cash from sale of land | |||||
| Recovery of NWC | |||||
| Terminal cash flow | |||||
| Opportunity cost of land | |||||
| Net working capital | |||||
| Cost of new machine | |||||
| Initial cash flow | |||||
| Cash flow from assets | |||||
| Discount rate | 13.00% | ||||
| NPV | |||||
| IRR |
