Someone please help me fill out this excel table. It is focused on Capital Budge

Question

Someone please help me fill out this excel table. It is focused on Capital Budgeting.

Old Machine Book Value Market Value Salvage Value In 5 Years Annual Depreciation Rate $ 130,000 $90,000 $90,000 20% 4,000,000 New Machine Market Value Salvage Value In 5 Years Annual Depreciaiton Rate Savings In Costs $ 4,000,000? S2,500,000 33.33% 1,000,000 40% 15% Tax Required Rate of Return Year 1 Year 2 Year 3 Year 4 Year 5 $ 200,000.00 200,000.00 200,000.00 200,000.00 200,000.00 Savings in Costs Depreciation on New Machine 1,333,200.00 888,844.44 592,592.59 $395,081.48 263,400.82 Depreciation on Old Machine Incremental Depreciation Incremental Saving Tax Incremental Profit 26,000.00 20,800.00 $ 16,640.00 13,312.00 10,649.60 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Initial Investment Change in NWC Operating CFs Terminal CFs Project CFs

Explanation / Answer

Old Machine Purchase Price         130,000.00 Mkt Value            90,000.00 book Value            90,000.00 Life 5 Yrs Salvage value after 5 yrs 0 Annual dep rate 20% New Machine Purchase Price      4,000,000.00 Mkt Value      4,000,000.00    1,500,000.00 Salvage Value in 5 yrs      2,500,000.00        300,000.00 0.075 Depreciation rate 33.33% Yrs 0.375 Savings In cost      1,000,000.00 Tax 40% Rate of return req 15% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Opening value of asset    4,000,000.00    2,666,800.00    1,777,955.56    1,185,362.97        790,281.49 Deprecaition    1,333,200.00        888,844.44        592,592.59        395,081.48        263,400.82 Closing value of asset    2,666,800.00    1,777,955.56    1,185,362.97        790,281.49        526,880.67 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 New Machine Economics Savings    1,000,000.00    1,000,000.00    1,000,000.00    1,000,000.00    1,000,000.00 Effective savings post tax (Saving *(1-tax rate)        600,000.00        600,000.00        600,000.00        600,000.00        600,000.00 New Machine Cost Outgo      4,000,000.00 0 0 0 0 0 Depreciation    1,333,200.00        888,844.44        592,592.59        395,081.48        263,400.82 Salvage Value,Terminal Cash Flow    2,500,000.00 Change in NWC 0 0 0 0                         -   Operating cash flows (Post tax savings+deprectiation)    1,933,200.00    1,488,844.44    1,192,592.59        995,081.48        863,400.82 Terminal cash flow (salvage value)    2,500,000.00 Investment (4,000,000.00) Free Cash Flow (Cash inflow - outflow) (Project CF) (4,000,000.00)    1,933,200.00    1,488,844.44    1,192,592.59        995,081.48    3,363,400.82 NPV @ 15% $1,593,146.49 Net Present Value is higher then current market price of old machine I,e $900,000.0 Hence we can go for buying a new machine.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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