Assignment Capital Budgeting

PG-11-7 BOOK VALUVE

ASSEST A (MACRS 5)
INSTALLED COST 950,000.00
LESS DEPRECIATION (MACRS 5)
1ST YEAR DEPRICATION (95000x20%) 190,000.00
2nd YEAR DEPRICATION (95000x32%) 304,000.00
3RD YEAR DEPRICATION (95000x19%) 180,500.00

ACCUMULATED DEPRICATION 674,500.00 (674,500.00)

BOOKE VALUVE 275,500.00

ASSEST B (MACRS 3)
INSTALLED COST 40,000.00
LESS DEPRECIATION (MACRS 5)
1ST YEAR DEPRICATION (95000x20%) 13,200.00

ACCUMULATED DEPRECIATION 13,200.00 (13,200.00)

BOOKE VALUVE 26,800.00

ASSEST C (MACRS 5)
INSTALLED COST 96,000.00
LESS DEPRECIATION (MACRS 5)
1ST YEAR DEPRICATION (96000x20%) 19,200.00
2nd YEAR DEPRICATION (96000x32%) 30,720.00
3RD YEAR DEPRICATION (96000x19%) 18,240.00
4TH YEAR DEPRICATION (96000x12%) 11,520.00

ACCUMULATED DEPRICATION 79,680.00 (79,680.00)

BOOKE VALUVE 16,320.00
ASSEST D (MACRS 5)
INSTALLED COST 350,000.00
LESS DEPRECIATION (MACRS 5) 70,000.00
1ST YEAR DEPRICATION (350,000x20%)

ACCUMULATED DEPRICATION 70,000.00 (70,000.00)

BOOKE VALUVE 280,000.00

ASSEST E (MACRS 7)
INSTALLED COST 150,000.00
LESS DEPRECIATION (MACRS 7)
1ST YEAR DEPRICATION (1500000x14%) 21,000.00
2nd YEAR DEPRICATION (150000x25%) 37,500.00
3RD YEAR DEPRICATION (150000x18%) 27,000.00
4TH YEAR DEPRICATION (150000x12%) 18,000.00
5TH YEAR DEPRICATION (150000x9%) 13,500.00

ACCUMULATED DEPRICATION 117,000.00 (117,000.00)

BOOKE VALUVE 33,000.00

PG-11-8 PART (A)BOOK VALUVE

ASSEST A (MACRS 5)
MACHINE PURCHASE COST 80,000.00
LESS DEPRECIATION (MACRS 5)
1ST YEAR DEPRICATION (95000x20%) 16,000.00
2nd YEAR DEPRICATION (95000x32%) 25,600.00
3RD YEAR DEPRICATION (95000x19%) 15,200.00

ACCUMULATED DEPRICATION 56,800.00 (56,800.00)

BOOKE VALUVE 23,200.00
 PG-11-8 PART (B) TAX
LIABILTIES
SLAE 100,000.00 56,000.00 23,200.00 15,000.00

MACHINE PURCHASE (80,000.00) (80,000.00) (80,000.00) (80,000.00 )

GIAN/(LOSS) 20,000.00 (24,000.00) (56,800.00) (65,000.00)

TAX/RELEAF ON GAIAN
40% 8,000.00 (9,600.00) (22,720.00) (26,000.00)

ACC.DEPRECIATION 56,800.00 56,800.00 56,800.00 56,800.00

TAX ON DEPRECIATION
40% 22,720.00 22,720.00 22,720.00 22,720.00

TAX

TAX/(RELEAF) 8,000.00 (9,600.00) (22,720.00) (26,000.00)

TAX ON DEPRECIATION 22,720.00 22,720.00 22,720.00 22,720.00

TAX LIABILTIES 30,720.00 13,120.00 - (3,280.00)

PG-11-10PART a
CURRENT ASSTES CURRENT LIABILTIES

CASH 15,000.00 ACCOUNT PAYABLES 90,000.00

ACCOUNTS RECEIVABLES 150,000.00 ACCURALL 40,000.00

INVENTORIES (10,000.00)

TOTAL CURRENT ASSTES 155,000.00 TOTAL CURRENT LIABILITIES 130,000.00

NETWORKING CAPITAL= CURRENT ASSTES-CURRENT LIABILITIES

CURRENT ASSTES 155,000.00
CURRENT LIABILITIES 130,000.00
NWC 25,000.00

PART B
Purchase of new machine an increase in net working capital this increase treated
cash flow out the cost of the new machine purchase
PART C
yes in computing the terminal cash flow the net working capital increase should be reversed

PG-11-12

NEW MACHINE 35,000.00

INSTALATION COST 5,000.00
TOTAL DEPRECIATED VALUED 40,000.00
OLD MACHINE
SALE OLD MACHINE 25,000.00 (25,000.00)
LESS MACHINCE COST ( 20,000.00)
GAIN/LOSS ON MACHINE 5,000.00
TAX/RELIEF ON GAIN/(LOSS) @ 40% 2,000.00
ACC. DEPRECIATION (W-1) 14,200.00
TAX ON DEPRECIATION @ 40% 5,680.00
TAX PAID ON SALE OF MACINE 7,680.00 7,680.00
INITIAL INVESMWNT OF NEW MACHINE 22,680.00

WORKING 1
1ST YEAR DEPRICATION (25000x20%) 4000
2nd YEAR DEPRICATION (25000x32%) 6400
3RD YEAR DEPRICATION (25000x19%) 3800
ACC.DEPRECIATION 14200

PG-11-14 (A)BOOK VALUVE

ASSEST C (MACRS 7)
INSTALLED COST 60,000.00
LESS DEPRECIATION (MACRS 7)
1ST YEAR DEPRICATION (60000x14%) 8,400.00
2nd YEAR DEPRICATION (60000x25%) 15,000.00
3RD YEAR DEPRICATION (60000x18%) 10,800.00
4TH YEAR DEPRICATION (60000x12%) 7,200.00

ACCUMULATED DEPRICATION 41,400.00 (41,400.00)

BOOKE VALUVE 18,600.00

PG-11-14 (B)
TAX PROCEED
SLAE 35,000.00 35,000.00
MACHINE PURCHASE 60,000.00
GIAN/(LOSS) (25,000.00)
TAX/RELEAF ON GAIAN 40% (10,000.00)
ACC.DEPRECIATION 41,400.00
TAX ON DEPRECIATION 40% 16,560.00

TAX
TAX/(RELEAF) (10,000.00)
TAX ON DEPRECIATION 16,560.00
TAX LIABILTIES 6,560.00 (6,560.00)
AFTER TAX PROCEED SALE OF OLD MACHINE 28,440.00

PG-11-14 PART C

CURRENT ASSTES CURRENT LIABILTIES

ACCOUNTS RECEIVABLES 70,000.00 NOTE PAYABLE 15,000.00

INVENTORIES 50,000.00 ACCOUNT PAYABLE 40,000.00

ACCURAL (20,000.00)

TOTAL CURRENT ASSTES 120,000.00 TOTAL CURRENT LIABILITIES 35,000.00

NETWORKING CAPITAL= CURRENT ASSTES-CURRENT LIABILITIES

CURRENT ASSTES 120,000.00
CURRENT LIABILITIES 35,000.00
NWC 85,000.00

PG-11-14 PART D
COST OF NEW ROSTER 130000
SALE AFTER TAX PROCEEDS PART(B) (28,440.00)
CAHNGING WORKING CAPITAL (P-C) 85,000.00
TOTAL INITIAL INVESTMENT 186560

PG-11-17 INCREMENTAL OPERATIN CASH

FLOW
1 2 3 4 5 6

SAVING 500.00 500.00 500.00 500.00 500.00 -

ANNUAL MAINTANCE COST (120.00) (120.00) (120.00) (120.00) (120.00) -

LESS DEPRECIATION (360.00) (576.00) (342.00) (216.00) (216.00) (90.00)

SAVING/(LOSS) BEFORE TAX 20.00 (196.00) 38.00 164.00 164.00 (90.00)

TAX / (RELIEF) ON SAVING @40% (8.00) 78.40 (15.20) (65.60) (65.60) 36.00

SAVING AFTER TAX 12.00 (117.60) 22.80 98.40 98.40 (54.00)

ADD DEPRECIATION 360.00 576.00 342.00 216.00 216.00 90.00

INCREMENTAL OPERATING CASH
FLOW 372.00 458.40 364.80 314.40 314.40 36.00

5year
1,800.00
0.20 360.00
0.32 576.00
0.19 342.00
0.12 216.00
0.12 216.00
0.05 90.00
1.00 1,800.00
 PG-11-18 INCREMENTAL OPERATIN
CASH FLOW
1 2 3 4 5 6

SAVING 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 -

LESS DEPRECIATION (9,600.00) (15,360.00) (9,120.00) (5,760.00) (5,760.00) (2,400.00)

SAVING/(LOSS) BEFORE
TAX 6,400.00 640.00 6,880.00 10,240.00 10,240.00 (2,400.00)
TAX / (RELIEF) ON
SAVING @40% (2,560.00) (256.00) (2,752.00) (4,096.00) (4,096.00) 960.00

SAVING AFTER TAX 3,840.00 384.00 4,128.00 6,144.00 6,144.00 (1,440.00)

ADD DEPRECIATION 9,600.00 15,360.00 9,120.00 5,760.00 5,760.00 2,400.00

INCREMENTAL
OPERATING CASH FLOW 13,440.00 15,744.00 13,248.00 11,904.00 11,904.00 960.00

PG-11-20 INCREMENTAL OPERATIN CASH FLOW

YEAR 1 2 3 4 5 6
000 000 000 000 000 000

SALE (NEW BUS) 1,850.00 1,850.00 1,830.00 1,825.00 1,815.00 1,800.00

EXPENSES (460.00) (460.00) (468.00) (472.00) (485.00) (500.00)

PROFIT/LOSS BEFORE DEPRECIATION 1,390.00 1,390.00 1,362.00 1,353.00 1,330.00 1,300.00

DEPREICATION (w-1) (600.00) (960.00) (570.00) (360.00) (360.00) (150.00)

PROFIT/LOSS BEFORE TAX 790.00 430.00 792.00 993.00 970.00 1,150.00

TAX@40% (316.00) (172.00) (316.80) (397.20) (388.00) (460.00)

PROFIT/LOSS AFTER TAX 474.00 258.00 475.20 595.80 582.00 690.00

DEPREICATION (w-1) 600.00 960.00 570.00 360.00 360.00 150.00

OPERATING CASH FLOW (NEW BUS)

 1,074.00 1,218.00 1,045.20 955.80 942.00 840.00

SALE (OLD BUS) 1,800.00 1,800.00 1,790.00 1,785.00 1,775.00 1,750.00

EXPENSES (500.00) (510.00) (520.00) (520.00) (530.00) (535.00)

PROFIT/LOSS BEFORE DEPRECIATION 1,300.00 1,290.00 1,270.00 1,265.00 1,245.00 1,215.00

DEPREICATION (w-1) (324.00) (135.00) - - - -

PROFIT/LOSS BEFORE TAX 976.00 1,155.00 1,270.00 1,265.00 1,245.00 1,215.00

TAX@40% (390.40) (462.00) (508.00) (506.00) (498.00) (486.00)

PROFIT/LOSS AFTER TAX 585.60 693.00 762.00 759.00 747.00 729.00

DEPREICATION (w-1) 324.00 135.00 - - - -

OPERATING CASH FLOW (OLD BUS) 909.60 828.00 762.00 759.00 747.00 729.00

OPERATING CASH FLOW (NEW BUS) 1,074.00 1,218.00 1,045.20 955.80 942.00 840.00

OPERATING CASH FLOW (OLD BUS) (909.6 ) (828.0 ) ( 762) (759) (747) (729)

INCREMENTAL CASH FLOW 164.40 390.00 283.20 196.80 195.00 111.00

Working no: 1

DEP-VALUE 3000 DEP-VALUE 2700

000 000
1 0.2 600 1 0.2 540
2 0.32 960 2 0.32 864
3 0.19 570 3 0.19 513
4 0.12 360 4 0.12 324
5 0.12 360 5 0.12 324
6 0.05 150 6 0.05 135
1 3000 1 2700