In Problem 9.33, the after-tax cash flow figures were generated using a taxation rate of 45% and

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In Problem 9.33, the after-tax cash flow figures were generated using a taxation rate of 45% and a straight-line depreciation over the eight-year project. Calculate the yearly after-tax cash flows if the five-year MACRS depreciation schedule were used.


Problem 9.33

It is necessary to evaluate the profitability of proposed improvements to a process prior to obtaining approval to implement changes. For one such process, the capital investment (end of year 0) for the project is $250,000. There is no salvage value. In years 1 and 2, you expect to generate an after-tax cash flow from the project of $60,000/y. In years 3−8, you expect to generate an after-tax cash flow of $50,000/y. Assume that the investments and cash flows are single transactions occurring at the end of the year. Assume an effective annual interest rate of 9%.

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Analysis Synthesis And Design Of Chemical Processes

ISBN: 9780134177403

5th Edition

Authors: Richard Turton, Joseph Shaeiwitz, Debangsu Bhattacharyya, Wallace Whiting

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