Finanzas

8-3 LG 3: Relevant Cash Flow Pattern Fundamentals

a. Year Cash Flow
Initial investment ($120,000)
1-18 $25,000 - $5,000 = $ 20,000

0 1 2 3 16 17 18


-120,000 20,000 20,000 20,000 ----------------- 20,000 20,000 20,000




b. Initial investment ($85,000 - $30,000) = ($55,000)
1-5 = $ 20,000
6 $20,000 + $20,000 - $10,000 = $ 30,000

0 1 2 3 4 5 6-55,000 20,000 20,000 20,000 20,000 20,000 30,000

c. Initial investment ($2,000,000)
1-5 $300,000 - $20,000 = $ 280,000
6 $300,000 - $500,000 = ($ 200,000)
7-10 $300,000 - $20,000 = $ 280,000

0 1 2 5 6 7 10



-2,000,000 280,000 280,000 (((((( 280,000 -200,000 280,000 (( 280,000



8-9 LG 4: Change in Net Working Capital Calculation

a. Currentassets Current liabilities

Cash $ + 15,000 Accounts payable $ + 90,000

Accounts receivable + 150,000 Accruals + 40,000
Inventory - 10,000
Net change $ 155,000 $ 130,000


Net working capital = current assets - current liabilities

( NWC = $155,000 - $130,000
( NWC = $ 25,000

b. Analysis of the purchase of a new machine reveals anincrease in net working capital. This increase should be treated as an initial outlay and is a cost of acquiring the new machine.

c. Yes, in computing the terminal cash flow, the net working capital increase should be reversed.


8-12 LG 4: Initial investment at Various Sale Prices

(a) (b) (c) (d)
Installed cost of new asset:

Cost of new asset $24,000 $24,000 $24,000$24,000

+ Installation cost 2,000 2,000 2,000 2,000
Total installed-cost $26,000 $26,000 $26,000 $26,000

After-tax proceeds from sale

of old asset

Proceeds from sale

of old asset (11,000) (7,000) (2,900) (1,500)
+ Tax on sale of old asset* 3,240 1,640 0 (560)
Total after-tax proceeds ( 7,760) (5,360) (2,900)(2,060)

Initial investment $18,240 $20,640 $23,100 $23,940



Book value of existing machine = $10,000 x [1 - (.20 -.32 -.19)] = $2,900


* Tax Calculations:

a. Recaptured depreciation = $10,000 - $2,900 = $7,100

Capital gain = $11,000 - $10,000 = $1,000



Tax on ordinary gain = $7,100 x (.40) = $2,840

Tax on capital gain = $1,000 x (.40) =400
Total tax = $3,240

b. Recaptured depreciation = $7,000 - $2,900 = $4,100

Tax on ordinary gain = $4,100 x (.40) = $1,640


c. 0 tax liability

d. Loss on sale of existing asset = $1,500 - $2,900 = ($1,400)
Tax benefit = - $1,400 x (.40) = $560



8-16 LG 5: Incremental Operating Cash Inflows
a.
Expenses Profits Before Operating(excluding Depreciation Net Profits Net Profits Cash
Year Revenue depreciation) and Taxes Depreciation Before Taxes Taxes After Tax Inflows
New Lathe
1 $40,000 $30,000 $10,000 $2,000 $8,000 $3,200 $4,800 $6,800
2 41,000 30,000 11,000 3,200 7,800 3,120 4,680 7,880
3 42,000 30,000 12,000 1,900 10,100 4,040 6,060 7,960
4 43,000 30,000 13,000 1,200 11,800 4,7207,080 8,280
5 44,000 30,000 14,000 1,200 12,800 5,120 7,680 8,880
6 -0- -0- -0- 500 (500) (200) (300) 200

Old Lathe
1-5 $35,000 $25,000 $10,000 -0- $10,000 $4,000 $6,000 $6,000

b. Calculation of Incremental Cash Inflows

Year New Lathe Old Lathe Incremental Cash Flows
1 $ 6,800 $ 6,000 $ 800
2 7,880 6,000 1,880
3 7,960 6,000 1,960
4 8,2806,000 2,280
5 8,880 6,000 2,880
6 200 -0- 200
c.
Cash Flows
$800 $1,880 $1,960 $2,280 $2,880 $200
| | | | | | |
0 1 2 3 4 5 6
End of Year

8-20 LG 4, 5: Relevant Cash Flows–No Terminal Value

a. Installed cost of new asset

Cost of new asset $76,000

+ Installation costs 4,000
Total cost of new asset $80,000
- After-tax...