Welcome

Anti Essays offers essay examples to help students with their essay writing.

Sign Up

Ethical Study Essay

Open Document

Below is an essay on "Ethical Study" from Anti Essays, your source for research papers, essays, and term paper examples.

331 – Exam Cap Bud Take Home portion

NAME_

1. A new computer system will require an initial cash outlay of $20,000 and will increase firm’s cash flows by $5,000 per year for each of the next seven years.

      A) Is the system worth installing if the WACC is 12%? Use the Net Present Value method to answer the question. (1/2 point)

      Initial Cash outlay:   -20,000
      $5000 for 7 years

      NPV= 2,818.78

      2,818.78 > 0 so ACCEPT

      B) From part A, compute IRR for the project? If cost of capital is 14% would you accept using the IRR method? Why or why not? (1/2 point)

    • IRR= 16.33%,   Accept
    • Cost of capital at 14%: Accept, 16.33% > 14%

2. Your firm purchased machinery for $20 million. The IRS rules provide depreciation percentages below.   The project however will end after 5 years. The
      equipment will be sold for $9 million at the end of five years. Tax rate is 40%. What is the after-tax salvage cash flow from the sale of the machine? (1/2 point)

      Year   1 2 3 4 5 6 7 8

      Depreciation 14%     25% 17% 13% 9% 9% 9% 4%

      ICF = Sales price - Taxes
      Where taxes = (sales price - book value) X Tax Rate
      and Book Value = Original cost - (Annual depreciation X #of years owned)

      BOOK VALUE - original cost – (annual depreciation X # of years)

      20,000,000 – (2,800,000 X 1 year) = 17,200,000
      17,200,000 – (4,300,000 X 1 year) = 12,900,000
      12,900,000 – (2,193,000 X 1 year) = 10,707,000
      10,707,000 – (1,391,910 X 1 year) = 9,315,090
      9,315,090 – (838358.1 X 1 year) = 8,476,731.9

      TAXES (sales price-book value) X tax rate
      (9 million- 8,476,731.9) X .40 = 209,307.24

      ICF= Sales price- taxes
      9,000,000 - 209,307.24 = 8,790,692.76

3.   The following table represents sales forecasts for Golden Gelt Giftware. The price is $40 per unit and cost of production is $25 per unit.

Year 0 1 2 3 4

Unit Sales...

Show More


Citations

MLA Citation

"Ethical Study". Anti Essays. 19 Dec. 2018

<http://parimatch-stavka7.com/free-essays/Ethical-Study-169290.html>

APA Citation

Ethical Study. Anti Essays. Retrieved December 19, 2018, from the World Wide Web: http://parimatch-stavka7.com/free-essays/Ethical-Study-169290.html


Printer & Scanner & Fax | Comparison of Hunger Games to Broadcasting | Cloak Dagger