Below is a list of aspects of various capital expenditure proposals that the capital budgeting team of

Question:

Below is a list of aspects of various capital expenditure proposals that the capital budgeting team of Anchor, Inc., has incorporated into its net present value analyses during the past year. Unless otherwise noted, the items listed are unrelated to each other. All situations assume a 40% income tax rate and an 11% minimum desired rate of return.

1.Pre-tax savings of $$4,000$ in cash expenses will occur in each of the next three years.

2.A machine is purchased now for $$37,000$ cash.

3.A long-haul tractor costing, 9,000, 4,050, and $$1,950$ respectively, on the tax return over four years.

4.Equipment costing $$200,000$ will be depreciated over five years on the tax return in the following amounts: $$25,000;$ $$50,000;$ $$50,000;$ $$50,000;$ and $$25,000$.

Pre-tax savings of $$8,800$ in cash expenses will occur in each of the next six years.

Pre-tax savings of $$7,000$ in cash expenses will occur in the first, third, and fifth years from now.

The tractor described in aspect 3 will be sold after four years for $$5,000$ cash.

equipment described in aspect 4 will be sold after four years for $$20,000$ cash.

Required

Set up an answer form with the two column headings as shown below. Answer each investment aspect separately. Prepare your calculations on a separate paper and key them to each item. The answer to investment aspect | is presented as an example.

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a. Calculate and record in column A the related after-tax cash flow effect(s). Place parentheses around outflows.

b. Indicate in column B the timing of each cash flow shown in column A. Use 0 to indicate immediately and 1, 2, 3, 4, and so on for each year involved.

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