| WEEK 6 HOMEWORK ASSIGNMENT- 240 |
| P10-1 |
| | Initial Investment = | $42,000 |
| | After-Tax Inflows = | $7,000 |
| a. | Payback Period = | | Years |
| b. | Accept or Reject? |
| | Why or Why not? |
| P10-6 |
| | Cost of Capital | 10% | 12% | 14% |
| | Initial investment |
| | After-tax inflows |
| | Year 1 |
| | Year 2 |
| | Year 3 |
| | Year 4 |
| | Year 5 |
| | Year 6 |
| | Year 7 |
| | Year 8 |
| | NPV = |
| | Accept or reject? |
| P10-16 |
| a. | Internal Rate of Return (IRR): |
| | | Year-End Cash Flow |
| | Year | Project X | Project Y |
| | 0 |
| | 1 |
| | 2 |
| | 3 |
| | 4 |
| | 5 |
| | IRR |
| b. | Accept or Reject? |
| c. | Which project is preferable and why? |
| P10-22 |
| a. | Payback Period = |
| b & c. | NPV & IRR = |
| | Year | Cost of Capital | Cash Inflows |
| | 0 (Initial Investment) |
| | 1 |
| | 2 |
| | 3 |
| | 4 |
| | 5 |
| | | NPV = |
| | | IRR = |
| d. | Accept or reject? Why |
| PROBLEM P11-1 |
| | (Note: Just input Operating or Capital: No explanation is needed) |
| | Classification of Expenditure |
| a. | | |
| b. |
| c. |
| d. |
| e. |
| f. |
| g. |
| h. |
| PROBLEM P11-7 |
| ASSET | INSTALLED COST | DEPRECIATION % | ACCUMULATED DEPRECIATION | BOOK VALUE |
| A | $950,000 |
| B | $40,000 |
| C | $96,000 |
| D | $350,000 |
| E | $1,500,000 |
| PROBLEM 11-11 |
| a. | Book Value = |
| b. | After-tax proceeds: |
| | Sales price of old equipment |
| | Book value of old equipment |
| | Recapture of depreciation |
| | Taxes on recapture of depreciation |
| | After-tax proceeds |
| c. | Initial investment: |
| | Cost of new machine |
| | Less: Sales price of old machine |
| | Plus: Tax on recapture of depreciation |
| | Initial investment |
MGMT_240_Wk6_HW.xlsx
