stment $100,000 2 Leverage Factor 4 Interest Rate 5 Tax Rate 6 After Tax Marr $4
ID: 2803654 • Letter: S
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stment $100,000 2 Leverage Factor 4 Interest Rate 5 Tax Rate 6 After Tax Marr $40,000 10% 40% 12% 2 $50,000 s50,000 ss0,000 $50,000 $50,000 : . (Si0,000), ($10,000) (S4,000) ($3,200) ($2,400) (1,600(5800) ($20,000) (S20,000)($20,000) (20.000) (520,000) $16,000 $16,800$17,600 $18,400$19,200 (56,400) (6,720)(7.040) (57,360) ($7,680) $9,600 $10,080 $10,560 $11,040 $11,520 $20,000 $20,000 $20,000$20,000$20,000 ($8,000)(58,000) ($8,000) (58,000) (58,000) 9 Income 1o Cost 11 Interest 12 Depreciation 13 Taxable Income 14 Tax 15 Net Profit ($10,000) ($10,000): ($10,000) 17 Principal Payment 18 Equity Investment $60,000 40,000 $32,000$24,000 $16,000 $8,000 25.08%. 19 Cash Flow 20 Debt Balance ($60,000)$21,600 $22,080 $22,560 $23,040$23,520 so 21 PV @ MARR 22 After Tax IRR= 23 After Tax NPV |(S60,000.00) $19,285.71 $17,602.04 $15,057.76 $14,642.34 : s13,345.88 $20,933.73 #8 and #9 refer to the above table. Show the work using financial notations (P/F, 196, n) to calculate the value in Row 23 Column C. Show the logic first and then replace the logic with values from the interest tables. 8. Show the work to calculate the values in the cell number identified below. (Please use actual numerical values instead of cell values ie. Do not use row or columns numbers in your response) a. Row 11 Column D: b. Row 12 Column D: c. Row 13 Column D: d. Row 14 Column D: e. Row 15 Column D: f. Row 17 Column D: 9.Explanation / Answer
8.
9. a. Interest = 4,000 , it is the interest on opening debt @ 10% i.e 40,000 * 10/100 = 4,000
b. Depreciation = 20,000, it the depreciation calculated on total investment value of 100,000 @ 20% i.e
100,000 *20/100 = 20,000. The depreiation on futher years is being calculated on the basis of Straight line method.
c. Taxable income = 16,000, It is calculated as Income - Cost - Interest - Depreciation
= 50,000 - 10,000 - 4,000 - 20,000 = 16,000 = Taxable Income
d. Tax = 6,400, since, the tax rate = 40%, the tax calculated as 40% of Taxable Income i.e. 16,000 * 40/100 = 6,400
e. Net Profit = 9,600 , it calculated by deducting Tax from the taxable income i.e. 16,000 - 6,400 = 9,600
f. Principle payment = 8,000, since the debt is 40,000 for 5 years, it is getting amortized equally in all 5 years, hence it is calculated as 40,000 / 5 = 8,000
Cost/Investment 60000 Rate 12% Tenure 5 Year Cashflows PV Factor PV of Cashflows 0 -60000 1.000 -60000.00 1 21600 0.893 19286.71 2 22080 0.797 17602.04 3 22560 0.712 16058.76 4 23040 0.636 14642.34 5 23520 0.567 13346.88 Net Present Value (After Tax NPV) 20933.73Related Questions
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