Question: Please use colored cells for input data and a different colored cell for the answer. No hidden numbers in the formulas! If a number is

 Please use colored cells for input data and a different colored

Please use colored cells for input data and a different colored cell for the answer. No hidden numbers in the formulas! If a number is used, it should be visible if we print out the spreadsheet. Put each answer in a sheet labeled with the problem number, like "Problem 1" 1. A new municipal recycling collection vehicle can be purchased for $104,000. Its expected useful life is 6 years, at which time the market value and book value will be zero. Before-tax cash flow (BTCF) will be +$ 18,000 per year over the 6-year life of the vehicle. a. Use straight-line depreciation, an effective income tax rate of 36% and an after-tax MARR of 10% to determine the present worth of the investment. b. What is the after-tax internal rate of return? c. Is this vehicle a sound investment? Explain your answer. 2. Suppose natural gas experiences a 1.8% increase per year in real terms over the foreseeable future. The cost of 1,000 cubic feet of natural gas is now $7.50. a. What will be the cost in real terms of 1,000 cubic feet of natural gas in 16 years? b. If the general price inflation rate (e.g., the CPI) for the next 16 years is expected to average 3.2% per year, what will a 1,000 cubic feet of natural gas cost in actual dollars 16 years from now

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!