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(solution) Can you help me answer this case study question and show me each


Can you help me answer this case study question and show me each step in excels show what formula and  how you use it. I just want to know. 


Frank Smith Plumbing

 

Data Needed for analysis:

 

Year-1

 

Year-2 Project

 

Cost of Capital (borrowing)

 

12.00%

 

Cost of Truck

 

$200,000

 

Cost of additional equiment attached to truck

 

$15,000

 

Tax rate

 

35%

 

Annual Before Tax & Depreciation Truck Projected Earnings $70,000 $70,000 Depreciation Percentage Rate (MACRS)*

 

20.0%

 

32.0%

 

* The proposed truck has an estimated economic life of seven years but will be treated as a five-year MACRS property Calculate the following -- light yellow highlighted cells need to be co

 

Year-0 Year-1 Year-2 Annual Before Tax & Depreciation Truck Projected Earnings

 

Depreciation Expense

 

Annual Before Tax Truck Projected Earnings

 

?

 

Tax

 

Annual Projected Truck Earnings

 

?

 

Depreciation to add back

 

Projected Truck Net Cash Flow Decision Criteria: Pay Back Period

 

Discounted Pay Back Period (DPB)**

 

Net Present Value

 

Internal Rate of Return

 

Profitability Index Years

 

Years Discounted Cash Flow Needed for DPB Calc.

 

Recommendations: mith Plumbing ded for analysis:

 

Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 $65,000 $60,000 $55,000 $50,000 $40,000 $30,000 19.2%

 

11.5%

 

11.5%

 

5.8%

 

ed as a five-year MACRS property for depreciation purposes. 0.0% 0.0% Year-7 Year-8 ow highlighted cells need to be completed sion Criteria: mmendations: Year-3 Year-4 Year-5 Year-6

 


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Sep 13, 2020

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