# Instructions

Using the scenario below create your own Word doc or Excel spreadsheet and complete the tables.

A firm expects to have earnings before interest and taxes (EBIT) of \$165,000 in each of the next 6 years. It pays annual interest of \$15,000. The firm is considering the purchase of an asset that costs \$150,000, requires \$10,000 in installation cost, and has a recovery period of 6 years. It will be the firm’s only asset, and the asset’s depreciation is already reflected in its EBIT estimates.
1. Calculate the annual depreciation for the asset purchase using the MACRS depreciation schedule.
 Cost Percentages Depreciation Year (1) (2) (1) x (2) 1 2 3 4 5 6 Cost = asset cost + installation cost
1. Calculate the firm’s operating cash flows for each of the 6 years using the equation:  OCF = [EBIT x (1 – T)] + Depreciation
 NOPAT Depreciation Operating Cash Flows EBIT [(1) x (1 - .40)] [(2) + (3)] Year (1) (2) (3) (4) 1 2 3 4 5 6

This assignment is worth 30 points, 15 points each for the Depreciation Schedule and Operating Cash Flows.

# Submission

Use the upload button to submit a Word doc or Excel spreadsheet with the two completed tables.

 Subject Business Due By (Pacific Time) 09/21/2015 01:30 am
TutorRating
pallavi

Chat Now!

out of 1971 reviews
amosmm

Chat Now!

out of 766 reviews
PhyzKyd

Chat Now!

out of 1164 reviews
rajdeep77

Chat Now!

out of 721 reviews
sctys

Chat Now!

out of 1600 reviews

Chat Now!

out of 770 reviews
topnotcher

Chat Now!

out of 766 reviews
XXXIAO

Chat Now!

out of 680 reviews