ACT $311$ Winter $24$

Nam

Instructions: Using Excel, solve the following two problems. Show all work in Excel and submit the File through the EduCat system. Turn in this paper with your answers on it$.$

Problem #$2(6$ points$)$

Souris Company is considering a project that requires an investment of $$750,000.$ The project is expected to generate an annual cash flow of $$275,000$ for six years. The cash flow would be received at the end of each year.

The asset is considered a $5-$year property for depreciation purposes and would be disposed of at the end of the sixth year; at this time, it is expected to have no salvage value. The company plans to use MACRS.

Assume the cost of capital is $10$ percent and the income tax rate is $40$ percent.

Required: Determine the net present value of the asset using after$-$tax cashflows. $($Round amounts to dollars.$)$

MACRS Tax Rates

Year $1$: $20\mathrm{.}00\%$

Year $2$: $32\mathrm{.}00\%$

Year $3$: $19\mathrm{.}20\%$

Year $4$: $11\mathrm{.}52\%$

Year $5$: $11\mathrm{.}52\%$

Year $6$: $5\mathrm{.}76\%$

Answe $$