Farmington Enterprises wishes to estimate the After Tax Future worth of the foll

Question

Farmington Enterprises wishes to estimate the After Tax Future worth of the following investment. It will use SNL (straight line) depreciation to estimate its depreciation. Interest rate will be 1 = 6%, income tax rate will be 40% Initial cost of new machinery to be considered is 1,000,000. Salvage Value after 1ft years is 100,000. Cash flow is increased revenue 600,000 but with increased operating and maintenance expenses of 200,000 for each year (uniformly). Analyze the problem showing yearly depreciation, Taxable Income, Taxes and After Tax Cash Flow as well as the future value for the system at t= 10 years.

Explanation / Answer

year cash flow CF @ 6% Future value 0 -1000000 1.79085 -1790848 1 276000 1.68948 466296.2 2 466296.1927 1.59385 743205.3 3 743205.2889 1.50363 1117506 4 1117505.961 1.41852 1585204 5 1585203.564 1.33823 2121360 6 2121359.955 1.26248 2678168 7 2678168.067 1.19102 3189741 8 3189741.018 1.1236 3583993 9 3583993.008 1.06 3799033 10 3899032.588 1 3899033 21392691

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