ADDING INFLATION (R$ a A$) ATCF in A$

1. Select the preferred alternative using ATCF-Present Worth using incremental analysis Method after recognition of inflation. (f = 2%). Tax rate 40%. MARR ATCF = 10%

• Assume actual cash flow are in real dollars (R$) (base = 0)
• Depreciation Method: MACRS
• For ALT A Straight line (SL) Method (classical method) SL = Investment SV/N
• For ALT B MACRS GDS 5 years recovery period
• For ALT C MACRS ADS 5 years recovery period

Find the ATCF for the alternatives using A$ cash flows, then evaluate all alternatives on ATCF using incremental analysis.

($000) R$	A	B	C
Capital Investment	$12000	$18000	$24000
Annual Expenses	$9000	$5000	$3000
Annual Revenues	$10000	$6000	$4000
Market Value (MV or SV)	$1000	$1000	$1000
Useful Life	10	10	10