Submitted by: Submitted by zhixiangtian
Views: 598
Words: 1798
Pages: 8
Category: Business and Industry
Date Submitted: 05/22/2011 05:27 AM
Valuing Capital Investment Projects
1. A.
1) Project A:
|Project A |Year 1 |Year 2 |Year 3 |
|Revenue |21000 | | |
|Expenses |11000 | | |
|Before-tax cash flow (1) |10000 | | |
|Depreciation |10000 | | |
|Before-tax income |0 | | |
|Tax (2) |0 | | |
|After-tax cash flow (1)-(2) |10000 | | |
The payback period is 1 year.
Project B:
|Project B |Year 1 |Year 2 |Year 3 |
|Revenue |15000 |17000 | |
|Expenses |5833 |7833 | |
|Before-tax cash flow (1) |9167 |9167 | |
|Depreciation |5000 |5000 | |
|Before-tax income |4167 |4167 | |
|Tax (2) |1666.8 |1666.8 | |
|After-tax cash flow (1)-(2) |7500.2 |7500.2 | |
The payback period is 2 years.
Project C:
|Project C |Year 1 |Year 2 |Year 3 |
|Revenue |10000 |11000 |30000 |
|Expenses |5555 |4889 |15555 |
|Before-tax cash flow (1) |4555 |6111 |14445 |...