Scribd Logo
Upload

Welcome to Scribd!

  • 182 views

    Q401 Fall 11

    Uploaded by

    Jamie Woods
    This document summarizes a loan transaction where a firm takes out a $30,000 loan in year 1 at a 9% interest rate. It must make annual payments in years 2 and 3. The firm's tax rate is 40% and minimum acceptable rate of return (MARR) is 5%. The document provides tables with the annual payment amounts and net present values for different loan lengths and asks the reader to fill in an income statement and cash flow statement for years 1 through 3, and determine if this is a good investment.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content

    You might also like

    Q401 Fall 11

    Uploaded by

    Jamie Woods
    182 views2 pages
    This document summarizes a loan transaction where a firm takes out a $30,000 loan in year 1 at a 9% interest rate. It must make annual payments in years 2 and 3. The firm's tax rate is 40% and minimum acceptable rate of return (MARR) is 5%. The document provides tables with the annual payment amounts and net present values for different loan lengths and asks the reader to fill in an income statement and cash flow statement for years 1 through 3, and determine if this is a good investment.

    Original Description:

    Original Title

    Q401Fall11

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    This document summarizes a loan transaction where a firm takes out a $30,000 loan in year 1 at a 9% interest rate. It must make annual payments in years 2 and 3. The firm's tax rate is 40% and minimum acceptable rate of return (MARR) is 5%. The document provides tables with the annual payment amounts and net present values for different loan lengths and asks the reader to fill in an income statement and cash flow statement for years 1 through 3, and determine if this is a good investment.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    182 views2 pages

    Q401 Fall 11

    Uploaded by

    Jamie Woods
    This document summarizes a loan transaction where a firm takes out a $30,000 loan in year 1 at a 9% interest rate. It must make annual payments in years 2 and 3. The firm's tax rate is 40% and minimum acceptable rate of return (MARR) is 5%. The document provides tables with the annual payment amounts and net present values for different loan lengths and asks the reader to fill in an income statement and cash flow statement for years 1 through 3, and determine if this is a good investment.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    of 2

    EC 314: Public and Private Investment Fall 2011 Q4: Income Cash Flow #1

    PASS Name:

    NO PASS

    Consider the following transaction. You are taking out a $30,000 loan in year 1. The terms of the loan are that you will make single annual payments in years 2 and 3. The interest rate on the loan is 9%. Your rm faces a combined tax rate of 40.00% and a MARR of 5.00%.
    Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 3 Year 33.33 44.45 14.81 7.41 5 Year 20.00 32.00 19.20 11.52 11.52 5.76 7 Year 14.29 24.49 17.49 12.49 8.93 8.92 8.93 4.46 10 Year 10.00 18.00 14.40 11.52 9.22 7.37 6.55 6.55 6.56 6.55 3.28 15 Year 5.00 9.50 8.55 7.70 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95

    Income Statement Year 1 Year 2 Operating Revenue Operating Expenses Interest Depreciation Taxable Income Tax Net Income Cash Flow Operations Net Income Depreciation Investments Working Capital Gains Tax Finance Net Cash Flow 1. Fill in the Income and Cash Flow Statement above. 2. Is this a good investment?

    Year 3

    Year 4

    You might also like