Connor Brenna, Jacob Bower, Steven Busseno
We pledge our Honor that we have abided by the Stevens Honor System
E355 HW5
a.
year
beginning balance
1
2
annual payment interest
650000
374524
340476
374524
total
b.
year
initial cost
0
1
2
depr. Rate
depr. Expense
400000
0
0.6
0.4
0
240000
160000
400000
total
c.
depr
Tax = (FMV - BV) * TR
After tax cash flow
non depr. Tax = (FMV - IC) *TR
After tax cash flow
d.
1
2
3
4
5
6
7
8
9
10
11
12
Cash Flows
Operating Revenue
Cash Expenses
Oper. Income befor Depr.
Depreciation
Oper. Income
Interest expense
Pretax Net Income
Income Taxes
Investment Tax Credit
Net Income AT
Depreciation
Net C.F. from Oper.
65000
34048
99048
15000
FMV - TAX
45000
30000
FMV - TAX
160000
0
$
$
$
$
$
$
$
$
$
$
$
$
-
$
$
$
$
$
$
$
$
$
$
$
$
1
1,900,000
(350,000)
1,550,000
(240,000)
1,310,000
(65,000)
1,245,000
(311,250)
80,000
1,013,750
240,000
1,253,750
$
$
(400,000) $
(309,524)
-
e.
14a
13 Principal Repayment
Depreciable Capital
14b
14c
Non-depreciable Capital
Loan Proceeds
15 Capital Gains/Losses
16 Working Capital
17 Net Capital Cash Flow
$
$
$
$
$
(70,000)
650,000
(200,000)
(20,000)
$
$
$
$
$
(309,524)
18
19
20
21
$
(20,000.00) $
1
(20,000.00) $
(20,000.00) $
944,226.19
0.8333
786,823.68
766,823.68
f.
g.
Total Cash Flow
Discount Factor
Net Present value
Cumulative NPV
$
$
The Investment should be undertaken because we have a Net Present Value of
around 1.7 million dollars.
principle repayment
ending balance
309524
340476
340476
0
650000
Accumulated depr.
Ending BV
400000
160000
0
240000
400000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2
1,900,000
(350,000)
1,550,000
(160,000)
1,390,000
(34,048)
1,355,952
(338,988)
110,000
1,126,964
160,000
1,286,964
Total
$
$
$
$
$
$
$
$
$
$
$
$
(340,476) $
45,000 $
3,800,000
(700,000)
3,100,000
(400,000)
2,700,000
(99,048)
2,600,952
(650,238)
190,000
2,140,714
400,000
2,540,714
(650,000)
(355,000)
n
i
P
A
A pay
2
10%
650000
0.58
374523.8
$
$
$
$
$
$
$
$
160,000
200,000
64,524
$
$
$
$
$
90,000
650,000
(265,000)
1,351,488.09 $ 2,275,714.28
0.6944 $
938,473.33 $ 1,705,297.01
1,705,297.01