Cgnore income taxes in this problem.) Monson Company is cossidering fere imvestm

Question

Cgnore income taxes in this problem.) Monson Company is cossidering fere imvestmest opotulities with sh flows as described below Project A: Cash investment now Cash inflow at the end of 5 years. Cash inflow at the end of 8 years. $21.000 $21,000 Project B Cash investment noW $11,000 Annual cash outflow for 5 years Additional cash inflow at the end of 5 year. $21,000 Project C: Cash investment now Annnal cash inflow for 4 years$11,000 Cash outflow at the end of 3 years$5,000 Additional oash inflow at the end of 4 voars.. $15,000 modar Required: project assuming Monson Company uses a 12% discount ompute the net present value of each 13, Uzzle Corporation uses a discount rate of i0% and has a tax rate of 30%. The following cach nows occur in the last year of an 8-year equipment selection investment project: $75,000 Net operating cash inflows. $12,000 Salvage value from sale of equipment.. total after-tax present value of the cash flows above is closest to: A. $26,199 B. $24,518 abo The assumed salvage value was zero when the depreciation deductions were computed for tax purposes. The C:$28,440 D. $12,189

Explanation / Answer

12. Calculation of Net Present Value of Moonsoon company useing 12% Discounting rate.

A. Project A

B. Project B

C. Project C

13. Calculation of Net Present Value using 10% Discounting rate.

Particulars Amount Present value of the Cash flow at the end of 5th Year ($ 21,000 * 0.5674 Present value of $1 at the end of 5th year At 12%) (A) $11,916 Present value of the Cash flow at the end of 8th Year ($ 21,000 * 0.4039 Present value of $1 at the end of 7th year At 12%) (B) $8,482 Total Cash Flow (C= A+B) $20,398 cash investment Now (D) $15,000 Net Present Value (E= C-D) $5,398

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