Net salvage value of a 3 year tax life asseta new asset

Assignment Help Project Management

Reference no: EM13363319

Net salvage value of a 3 year tax life asset

A new asset with a 3-year tax life is to be used in a 5-year project. The asset cost $200,000 and will be depreciated based on MACRS. The machine will generate revenues of $100,000 a year and operating expenses, excluding depreciation, is $40,000 a year. The asset is expected to be sold for $20,000 at the end of the project. Assume 34% tax rate and 11% required rate of return.

(a) Find what is the net salvage value of the asset?

(b) Show the NET cash flows of year 1 through year 5.

(c) Explain what is the NPV of the project? (Under MACRS, the depreciation rate for an asset with 3-year tax life is: 33.33%, 44.44%, 14.82%, 7.41%, in year1, year 2, year 3, and year 4 respectively).

Reference no: EM13363319

Questions Cloud

Evaluate technical performanceconsider a situation in which : evaluate technical performanceconsider a situation in which the project manager a generalist is asked to provide an

Micro-managementexplain what are the advantages and : micro-managementexplain what are the advantages and disadvantages of micromanagement? what are the advantages and

Important information about checklist versus the weighted : important information about checklist versus the weighted factor methodneed assistance with the following short essay

Project managementexplain how can a project manager : project managementexplain how can a project manager influence customer expectations and perceptions?what is the

Net salvage value of a 3 year tax life asseta new asset : net salvage value of a 3 year tax life asseta new asset with a 3-year tax life is to be used in a 5-year project. the

Construction project planning and controlshow the benefits : construction project planning and controlshow the benefits to the project lifecycle by commencing the planning proccess

Reward risk ratio for project a and project byour company : reward risk ratio for project a and project byour company is considering two mutually exclusive projects a and b. the

Cost of capital based on another firms projectwhen a : cost of capital based on another firms projectwhen a manager develops a cost of capital for a specific project based on

Cash flow at time zeroall of the following are related to a : cash flow at time zeroall of the following are related to a proposed project. which of these should be included in the

User Account

All Pages