73
What is the operating cash flow two years from today (t=2)?
$88,820
$95,940
$98,040
$116,480
$119,960
74
What is the operating cash flow three year from today (t=3)?
$85,824
$90,924
$95,040
$108,288
$109,405
75
What is the operating cash flow four years from today (t=4)?
$86,746
$93,478
$103,373
$105,245
$110,400
76
How much tax is the firm expected to pay when the asset is sold for $50,000 in year 5?
$6,314
$8,671
$9,629
$10,088
$19,233
77
What is the total cash flow five year from today (t=5)?
$127,431
$130,313
$142,452
$179,824
$207,059
78
What is the project's NPV?
$19,125
$28,941
$33,231
$55,254
$70,263
suppose the following data holds:
IBC, Inc. is considering the purchase of a $320,000 computer that has an economic life of 5 years. The computer will be depreciated according to 5-year MACRS schedule (20%, 32%, 19.2%, 11.52%, 11.52%, and 5.76%). The market value of the computer will be $50,000 in 5 years. The use of computer will save annual costs of $120,000 for the next five years. For simplicity, these cost savings are assumed to occur at the end of these years. As a result of this project, the net working capital will increase by $60,000 immediately, and it will be recovered at the end of year 5. The firm’s tax rate is 20% and its cost of capital is 12%.