UAS SEMESTER 2 2011/2012 MS4200 / Manajemen & Ekonomi Kerekayasaan 15 MEI 2012 07.00-10.00 V1. Consider the following data for an investment project : © Required Capital inverstment at n=0; $ 200,000 © Project service life : 15 years © Salvage value at n= 15 : $20,000 ‘+ Annual revenue : $90,000 © Annual O&M costs(not including depreciation) : $40,000 ‘© Depreciation method for tax purpose : 7-year MACRS (Table 8.8 page 318) © Income tax rate : 40 % ‘© Principal payment in year 15 : $18,000 © Interest payment in year 15 : $2,000 What would be the net cash flow at the end of year 15? Note : There will be no depreciation in year 15, as the asset will be fully depreciated in year 8, There will be entries related to financing activities Year 15 Income Statement Revenue Expenses : O&M cost Depreciation Debt interest Taxable income | Income taxes (40%) | Net Income Cash Flow Statement Net income Depreciation Cash flow from investing Investment Salvage value Goins taxes Cash flow from financing: Principal payment Net cash flow Cesh flow from operation : aaY 2. A comporation is considering purchasing a machine that will save $400,000 per year before taxes. The cost of operating the machine, including maintenance is $100,000 per year. The machine costing $180,000 will be needed for 5 years, after which it will have a salvage value of $18,000. A straight-line depreciation with no half-year convention applies(i.e..20% each year). If the firm wants 12% rate of retum afler taxes, what is the net present value of the cash flows generated from this machine? The firm’s income tax rate is 40%. Income Statement Revenue Expenses: O&M. Depreciation ‘Taxable income Income Tax 40% Net Income ‘Cash Flow Statement Cash Flow from operation : Net income Depreciation | Cash flow from Investing: Investment Salvage value Gains taxes Net Cash Flow PW(12%) = 3. Considering the following finacial data for an investment project : © Required capital investment at n =0 : $300,000 © Project service life : 10 years © Salvage value at the end of 10 years :$50,000 ‘© Depreciation method for tax purposes : 10 year MARCS (Table 8.8 page 318) © Annual revenue : $200,000 * Annual O&M expenses(not including depreciation & interest) : $ 80,000 © Required investment in working capital at n = 0 (which will be recovered in full at the end of project year) : $ 40,000 * The income tax rate to use : 40% - Determine the project cash flow at the end of year 10, Note: There is a recovery of working capital in the amount of $40,000 at the end of year 10. There is no tax consequences on this recovery as it is not income. The book value of the asset at the end of yearlb is $20,000 2aYear 10 Income Statement Revenue Sees . Expenses : O&M cost Depreciation Taxable Income Income Taxes (40%) Net Income ARAAA Cash Flow Statement Cash flow from operation : Net Income Depreciation Cash flow from investing : Working capital recovery Salvage value Gains taxes Net cash flow e PRRs A corporstion is considering purchasing a machine that will save $200,000 per year before taxes. The cost of operating the machine, including maintenance, is $40,000 per year. The machine will be needed for 4 years, after which it will have a zero salvage value. MACRS depreciation will be used assuming a 3-year class. The allowed depreciation amount as a percentage of the initial cost will be 33,33%, 44,45%, 14.81% and 7,41% respectively. If the firm wants a 12 % rate of retum afier taxes, how much ean it afford to pay for this machine? The firm’s income tax rate is 40% You are planning to lease an automobile for 36 months from an auto dealer. The negotiated price is $40,000. The required security deposit is $8000 at the time of the lease amd will be refunded in full at the end of the lease. The monthly lease payment at the end of each month is calculated to be $800. What kind of residual value (salvage value) was assumed by the dealer in calculating the monthly lease? The dealer's interest rate is known to be 7%, compounded monthly ‘The following data apply to X company: - Cash and marketable securities $200 > Fixed assets $400 - Sales $2,000 + Net Income $400 ~ Inventory $150 - Curent ratio 3.5 3/4~ Average collection period 45 days ~ Average common equity $500 Find X‘s: 1 Account receivable 2.Current assets 3.Current liabilities 4.Total assets 5.Long-term debt 6.Profit margin als