Calculate after-tax cash flow

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Reference no: EM1356771

In order to expand its business, Freds Parts Distributing, Inc., is considering the purchase of 10 pickup trucks at a total cost of $150,000. The company expects to keep these trucks for four years, then sell them. The company expects these trucks to generate a pretax net cash flow of $75,000 in year 1, $70,000 in year 2, $65,000 in year 3, $60,000 in year 4, and to sell after four years for a total price of $30,000 fully taxable. The company's marginal tax rate is 28% and its cost of capital is 6%.

Calculate:

a.After tax cash flow for each year 1 thru 4
b.Payback period
c.Profitability Index
d.Net Present Value
e.Internal Rate of Return

Reference no: EM1356771

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