1. Determine the Payback period using after-tax cash flows:2. Determine the Net present value using after-tax cash flows (use 3 decimal places for the PV factor) Bert Corporation is considering an investment in equipment for $150,000.Data related to the investment are as follows:Income beforeDepreciation and Taxes$60,000Year160,00060,00060,0003460,000Cost of capital is 10 percent.Bert uses the straight-line method of depreciation with mid-year convention for tax purposes. Inaddition, its tax rate is 40 percent and the depreciable life of the equipment is four years with nosalvage value. The equipment is sold at the end of the fifth year.

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Bert Corporation is considering an investment in equipment for $150,000. Data related to the investment are as follows: Income before Depreciation and Taxes $60,000 Year 1 60,000 60,000 3 4 60,000 60,000 Cost of capital is 10 percent. Bert uses the straight-line method of depreciation with mid-year convention for tax purposes. In addition, its tax rate is 40 percent and the depreciable life of the equipment is four years with no salvage value. The equipment is sold at the end of the fifth year.

Bert Corporation is considering an investment in equipment for $150,000. Data related to the investment are as follows: Income before Depreciation and Taxes $60,000 Year 1 60,000 60,000 3 4 60,000 60,000 Cost of capital is 10 percent. Bert uses the straight-line method of depreciation with mid-year convention for tax purposes. In addition, its tax rate is 40 percent and the depreciable life of the equipment is four years with no salvage value. The equipment is sold at the end of the fifth year.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 11P

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