Can Someone do this in 3-4 Hours

Homework 8 from Lesson 9

Due: Sunday, November 18,2018

You only need to submit one file to the Canvas dropbox: An Excel file (100 points): A spreadsheet showing your approach with your timeline, your calculations, and your solutions.

Question 1 (20 points):

Calculate the payback period, discounted payback period, the after tax NPV, and the after tax IRR for the following After Tax Cash Flow, assuming a minimum discount rate of 10%. Please show your work and include all the required equations.

Year	0	1	2	3	4	5	6	7	8	9	10
ATCF	C=20,000	C=10,000	C=10,000	I=18,000	18,000	I=18,000	I=20,000	I=20,000	I=20,000	I=14,000	I=14,000

Question 2 (40 points):

Suppose you need to decide between selling an old machine or keeping it with a major overhaul:

A) Selling the machine at time zero for $1,000,000 with zero book value and paying the tax of 21%.

B) Keeping the machine, which requires a major overhaul cost of $500,000 at time zero. The overhaul cost is depreciable from time 0 to year 7 (over eight years) based on MACRS 7-year life depreciation with the half year convention (table A-1 at IRS). In this case, the machine can produce and generate equal annual revenue of X for eight years (year 1 to 8) and has a salvage value of $0 at the end of year 8. The operating cost will be $110,000 per year from year 1 to year 8.

Calculate the minimum annual revenue that the machine has to generate to break-even with NPV of selling the machine. Consider 21% tax rate and after-tax minimum ROR of 10%.

Question 3 (40 points):

This question is similar to question 2, but the annual revenue is given and sale value is unknown. Suppose you need to decide between selling an old machine or keeping it with a major overhaul. You can:

A) Selling the machine at time zero for X dollars with zero book value and paying the tax of 21%.

B) Keeping the machine, which requires a major overhaul cost of $500,000 at time zero. The overhaul cost is depreciable from time 0 to year 7 (over eight years) based on MACRS 7-year life depreciation with the half year convention (table A-1 at IRS). In this case, the machine can produce and generate equal annual revenue of 440,000 dollars for eight years (year 1 to 8) and has a salvage value of $0 at the end of year 8. The operating cost of the machine will be $110,000 per year from year 1 to year 8.

Calculate the sales value, X, that will result in a break-even with the NPV of keeping the machine. Consider 21% income tax rate and after-tax minimum ROR of 10%.

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