Reference no: EM133183414

Question - Harper Corporation has the following information about the purchase of a new piece of equipment

Cash revenues less cash expenses $50,000 per year

Cost of equipment $130,000

Salvage value at the end of the 8th year $22,000

Increase in working capital requirements $35,000

Tax rate 25 percent

Life 8 years

The cost of capital is 13 percent.

Required - Please calculate the depreciation expense correctly - Calculate the following assuming straight-line depreciation:

i. Calculate the after-tax net income for each of the eight years.

ii. Calculate the after-tax cash flows for each of the eight years.

iii. Calculate the after-tax payback period.

iv. Calculate the accrual accounting rate of return on original investment for each of the eight years.

v. Calculate the net present value (NPV).

vi. Calculate the internal rate of return (IRR).