Can uou help with all using excel functions? Alpha Contracting, Inc. bought a li

Question

Can uou help with all using excel functions?

Alpha Contracting, Inc. bought a light, general purpose truck for $10,500. The by using this truck, Alpha earned $5,700 per year and expenses averaged averaged $950 per year. The truck was used for 2 years, at which time it was sold to $5,200. Assuming 3 year MACRS life for a light truck and an income tax rate of 34%, determine the company's after-tax present worth of this investment. 1. The before-tax cash flow for the first two years [0.6] 2. The book value at the end of the second year [1.1] 3. The taxable income for each year. Be careful, the second year is different [1.1] 4. The tax for each year [0.6] 5. The after tax cash flow—Again, the second year is different [1.0] 6. Assume MARR is 12%, calculate the Net Present Worth of this after-tax cash flow. [1.6] [6.0] Total Solution To do these tasks, complete this table. There are extra columns if you need them. Change or add whatever you may need. End of yr Before tax cash flow BTCF Depreciation MACRS % Depreciation $ Book value Taxable income Tax After tax cash flow ATCF Combined ATCF Present Worth 0 1 2

Explanation / Answer

End of the Year Before Tax Flows Expenses Deprecation Book Value Taxable Income Tax Rate Tax After Tax Flow MARR / 12% DCF 1 2 3 4 5=1-2-3 6 7= 5*6 8= 5-3-7 9 10 1                5,700           (950)      (3,500)             7,000             1,250 34%               425               4,325              0.893              3,862 2                5,700           (950)      (3,500)             3,500             1,250 34%               425               4,325              0.797              3,447 2                5,200             5,200               5,200              0.797              4,144 Present value of the Cash Flows 11464 Less : Initial Investment 10500 Net Present Value / Worth 964 Notes 1 Given the 3 years life for the Truck 2 There is no Salvage value, hence Depreciation per year is $ 3500 on straight-line basis 3 Ignored the Tax on Profit on Sale of Truck 4 Depreciation is Non Cash Expense and , Values of the Tax Shield Availed and again added back

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.