SOLVED PROBLEM 12.

1
Economic life of computer(years) 5
Depreciation rate(WDC) 33.33%
Tax rate 50.00%
Cash flow for the computer installation
year 0 1 2 3 4
Cost of computer -1,500,000
Savings in clerical cost 600,000 600,000 600,000 600,000
Savings in space cost 100,000 100,000 100,000 100,000
Operation and maintainenance cost 250,000 250,000 250,000 250,000
Depreciation 500000 333333 222222 148148
Profit before tax -50,000 116,667 227,778 301,852
Tax rate -24999.8 58333.417 113888.9 150925.9
Profit after tax -25,000 58,333 113,889 150,926
Net salvage value
Initial flow -1,500,000
Operating flow 475,000 391,667 336,111 299,074
Terminal flow
Net cash flow -1,500,000 475,000 391,667 336,111 299,074
 5

600,000
100,000
250,000
98766
351,234
175617.23
175,617
197,531

274,383
197,531
471,914