Struggling With Trying To Answer This Assignment; I'm Not Clear On How Question 1 & 2 Are Supposed To Be Answered, Would Be A Great Help To Have It Broken Down And Explained. Please & Thank You!

James_lan_Project 5 Workbook - Excel Sharyn Shaw X File Home Insert Page Layout Formulas Data View Tell me what you want to do Share Review Help & Cut Calibri 11 V A" A ab Wrap Text Accounting 60% - Accent6 Accent1 Accent2 Accent3 Accent4 EX AutoSum - AY O nsert Delete Format Fill - Sort & Find & Paste BE Copy Merge & Center $ - % Conditional Format as Accent5 Accent6 Comma Comma [0] Currency Clear Format Painter Formatting Table Filter . Select Cells Clipboard Font Alignment Number Styles Editing D66 X V =C66*0.96 A B C D E F G H K M N P Q R S 46 reward of this project for Mccormick. 47 48 49 1 Table 1 50 MACRS 51 Depreciation $350 52 Year 7 Year class Depreciati 53 14.29% $ 50.02 54 85.72 55 DO V CI MI A W N 24.49% $ 17.49% $ 61.22 56 12.49% $ 43.72 8.93% $ 31.26 3.92% $ 31.22 8.93% $ 31.26 4.46% $ 15.61 2 Table 2 A B C D E F Tax in After tax Cash from Cash outflow, Depreciat $Millions Cash Revenue in expenses in ion in Taxable Income 27.5% Flow In 64 Year $ Millions $ Millions $Millions in $ Millions rate $ Millions 65 O S 66 1 $ 1,800.00 $ 1,728.00 |$ 50.02 $ 21.99 $ 6.05 $ 65.95 67 2 $ 1,900.00 $ 1,824.00 $ 85.72 $ (9.72) $ (2.67) $ 78.67 68 3 $ 2,000.00 $ 1,920.00 $ 61.22 $ 18.79 $ 5.17 $ 74.83 69 4 $ 2,100.00 $ 2.016.00 | $ 43.72 $ 40.29 $ 11.08 $ 72.92 Instructions Cost of Capital Capital Budgeting + " - 130% 9:09 AM Type here to search O 9 1 9 75/29/2020James_lan_Project 5 Workbook - Excel Sharyn Shaw X Share File Home Insert Page Layout Formulas Data Review View Help Tell me what you want to do & Cut Calibri 11 V A" A ab Wrap Text Accounting 60% - Accent6 Accent1 Accent2 Accent3 Accent4 EX 2 AutoSum - nsert Delete Format Fill - AY O Sort & Find & Paste BE Copy * Format Painter Merge & Center $ - % Conditional Format as |Accents Accent6 Comma Comma [0] Currency Clear Formatting Table Filter . Select Cells Editing Clipboard Font Alignment Number Styles D66 X V =C66*0.96 B C D E F G H K L M N A 26 27 Questions: 1. What will be the depreciation for tax purposes each year? Complete Table 1 below to answer this question. Note: the total 28 deprecation for tax purposes will be $350 million. 29 30 2. Create an after-tax cash flow timeline for the proposed factory in Table 2 below. Note: The CFO estimates that operations 31 for the company will be profitable on an on-going basis. As a result, any accounting loss on this specific project will provide a 32 tax benefit for the company overall in the year of the loss. 33 34 3. Calculate the NPV and IRR using the data from Table 2. Should the project be accepted? 35 36 The following questions will be used to assist in evaluating the proposed project's risk. 37 4. The CFO is particularly concerned about the potential impact of future tax increases and that the expenses may have been 38 systematically understated. In order to undertake an objective evaluation of the project's risk, she asks you to prepare a 39 second analysis with a less favorable set of assumptions. She asks, "What would happen to the NPV and IRR calculations if the 40 cash outflow for expenses comes in 2% higher than estimated for the entire life of the project and if the tax rate increases to 41 50% (combined Federal and Maryland state rates) starting in year 4?" Create an after-tax cash flow timeline for the proposed 42 factory with these new assumptions in Table 3 below. 43 44 5. Calculate the NPV and IRR using the data from Table 3. Instructions Cost of Capital Capital Budgeting + " - 190% 9:10 AM Type here to search OJames_lan_Project 5 Workbook - Excel Sharyn Shaw X File Home Insert Page Layout Formulas Data Review View Help Tell me what you want to do Share & Cut 11 V A" A' ab Wrap Text Accounting 60% - Accent6 Accent1 Accent2 Accent3 Accent4 EX AutoSum - Fill - AY O Paste BE Copy Calibri Merge & Center Conditional Format as |Accent5 Accent6 Comma Comma [0] Currency nsert Delete Format Clear Sort & Find & Format Painter $ - % Formatting Table Filter . Select Clipboard Font Alignment Number Styles Cells Editing D66 X V =C66*0.96 A C D F F G H K M N O P Q R S Tax in After tax Cash from Cash outflow, Depreciat $ Millions Cash Revenue in expenses in ion in Taxable Income 27.5% Flow In 64 Year $Millions $ Millions $Millions in $ Millions rate $Millions 65 o S 66 1 $ 1,800.00 $ 1,728.00 |$ 50.02 $ 21.99 $ 6.05 $ 65.95 67 2 $ 1,900.00 $ 1,824.00 $ 85.72 $ (9.72) $ (2.67) $ 78.67 68 3 $ 2,000.00 $ 1,920.00 $ 61.22 $ 18.79 $ 5.17 $ 74.83 69 4 $ 2,100.00 $ 2,016.00 $ 43.72 $ 40.29 $ 11.08 $ 72.92 70 5 $ 2,200.00 $ 2,112.00 $ 31.26 $ 56.75 $ 15.60 $ 72.40 71 6 $ 2,300.00 $ 2,208.00 $ 31.22 $ 60.78 $ 16.71 $ 75.29 72 7 $ 2,400.00 $ 2,304.00 $ 31.26 $ 64.75 $ 17.80 $ 78.20 73 8 $ 2,500.00 $ 2,400.00 $ 15.61 $ 84.39 $ 23.21 $ 76.79 74 9 $ 2,600.00 $ 2,496.00 104.00 $ 28.60 $ 75.40 75 10 $ 2,700.00 $ 2,592.00 108.00 $ 29.70 $ 78.30 76 11 $ 2,600.00 $ 2,496.00 104.00 $ 28.60 $ 75.40 77 12 $ 2,500.00 $ 2,400.00 100.00 $ 27.50 $ 72.50 78 13 $ 2,400.00 $ 2,304.00 96.00 $ 26.40 $ 69.60 79 14 $ 2,200.00 $ 2,112.00 88.00 $ 24.20 $ 63.80 80 15 $ 2,000.00 $ 1,920.00 80.00 $ 22.00 $ 58.00 81 16 $ 1,800.00 $ 1,728.00 72.00 $ 19.80 $ 52.20 82 17 $ 1,500.00 $ 1,440.00 60.00 $ 16.50 $ 43.50 83 18 $ 1,200.00 $ 1,152.00 48.00 $ 13.20 $ 34.80 84 19 $ 800.00 $ 768.00 32.00 $ 8.80 $ 23.20 85 20 $ 400.00 $ 384.00 16.00 $ 4.40 $ 11.60 86 21 87 Instructions Cost of Capital Capital Budgeting + " - 130% 9:09 AM Type here to search O 9 ~ 9 ( 5/29/2020