Number 8 Transcribed Image Text: CHAPTER 9 Making Capital Investment Decisions 7. Calculating Salvage Value An asset used in a four-year project falls in the

Number 8 Transcribed Image Text: CHAPTER 9
Making Capital Investment Decisions
7. Calculating Salvage Value An asset used in a four-year project falls in the
five-year MACRS class for tax purposes. The asset has an acquisition cost of
$6.8 million and will be sold for $1.46 million at the end of the project. If the
tax rate is 23 percent, what is the aftertax salvage value of the asset?
LO 2
8. Calculating Project OCF Cusic Music Company is considering the sale
of a new sound board used in recording studios. The new board would sell
for $26,400, and the company expects to sell 1,500 per year. The company
currently sells 1,850 units of its existing model per year. If the new model
is introduced, sales of the existing model will fall to 1,520 units per year.
The old board retails for $24,900. Variable costs are 55 percent of sales,
0 2
depreciation on the equipment to produce the new board will be $1.875
million per year, and fixed costs are $2.9 million per year. If the tax rate is
22 percent, what is the annual OCF for the project?
9. Calculating Project OCF H. Cochran, Inc., is considering a new three-year
expansion project that requires an initial fixed asset investment of $2.15
million. The fixed asset will be depreciated straight-line to zero over its three-
year tax life, after which time it will be worthless. The project is estimated to
generate $2.23 million in annual sales, with costs of $1.25 million. If the tax
rate is 23 percent, what is the OCF for this project?
10. Calculating Project NPV In the previous problem, suppose the required
return on the project is 14 percent. What is the project’s NPV?
11. Calculating Project Cash Flow from Assets In the previous problem,
suppose the project requires an initial investment in net working capital of
$150,000, and the fixed asset will have a market value of $185,000 at the end
of the project. What is the project’s Year 0 net cash flow? Year 1? Year 2?

Give us your instructions.
Select the type of service you need: writing, calculations, or programming. We’ve created an intuitive order form that tells you what information to enter and where, so make sure to fill out each required field. Also, make your requirements as specific as possible. Don’t rush! Take your time and explain everything in detail how it works.

Proceed to checkout and enter your credit card details or PayPal login, how to pay. Follow the payment provider’s instructions to confirm the transaction.
Now your order is in our system! We’ll start processing it right away.

Place Your Order

Contact Us

Frequently asked questions
Is your service confidential?

When you place an order with our company, we ask you to provide us with such personal information as your name, phone number, and email address. We need this data to keep you updated on the important things related to your order or account.

Is there a possibility of plagiarism in my completed order?

We complete each paper from scratch and in order to make you feel safe regarding its authenticity, we check it for plagiarism before its delivery. To do that, we use our in-house software, which can find not only copy-pasted fragments but even paraphrased pieces of text. Unlike popular plagiarism detection systems that are used by most universities (e.g., we do not report to any public databases—therefore, such checking is safe.

We provide a plagiarism-free guarantee that ensures your paper is always checked for its uniqueness.

Is there a money-back guarantee? If yes, how can I receive a refund?

You can certainly get your money back in several cases. You can receive a full refund if you have paid for your order twice or if you have placed two identical orders. In case your paper was late or the quality of the paper does not correspond to your expectations, you will get compensation for these issues.

Do you keep a database of pre-written essays?

No, we do not have such a database. All papers you order from us are written from scratch. This means your paper is unique and has never been published before—neither will it be published after we deliver it to you.


When will my custom paper be done?

While placing an order with WritersHub, you can choose a period of time within which a paper should be delivered to you. The countdown until the specified deadline starts automatically from the moment we receive your payment in our system. For example, if you pay for your order at 6pm on Monday and choose a 3-day delivery option, you will receive your custom paper by 6pm on Thursday.

Remember that a writer needs a sufficient amount of time in order to conduct thorough research. Therefore, please choose the most suitable deadline when you place an order. Moreover, the later you need your paper to be delivered to you, the cheaper it will be. Thus, you will be able to save your money while your writer will have enough time to work on your order and ensure its quality.

Make sure you upload all the additional materials at the very beginning. If you fail to do that, the deadline for your order will be postponed as well.

I haven’t received my custom paper by the deadline. What should I do?

Let us know immediately about that. You can do it by writing a message on Facebook or email us. Our support manager will carefully examine your order and will assist you with it right away. The reasons for late delivery may vary from time to time. It can happen that you have entered a wrong email address or your spam filter does not allow you to receive emails from us. It is also possible that the writer is waiting for your reply and can not continue working without your assistance, or we are checking the work for plagiarism. Whatever the case may be, contact us if you have any problems with getting your order on time.