Responsibility Centers and Financial Control

1. Calculation of total sign outflowCost of lift = $2,000,000Cost of installation = $1,300,000Total initial outflow (Io) = $3,300,000yearly funds influxs and outflows forwards disparagement are the resembling to each one year one-year notes inflow = estimate of days x number of tickets x price per ticket= 40 x 300 x 55 = $660,000yearly specie outflow = number of days x cost per day= 200 x 500 = $100,000Net per year cash flow (Ia) = Annual cash inflow - Annual cash outflow = $560,000Present note harbor of $1 at a implication measure of 14% for 0 years = PVo = 1.0000Present value of annuity of $1 at a discount rate of 14% for 20 years = polyvinyl acetate = 6.6231Cash flowIa/Io in $polyvinyl acetate/PVoPresent assess in $Net annual cash flow560,0006.6231 3,708,936Total initial outflow-3,300,0001.0000-3,300,000Net Present Value 408,936Since the before tax income NPV is positive at the given discount rate of 14% adding the lift forgetBe a profi table investment. 2. Net annual cash flow before tax (Ia)= Annual cash inflow - Annual cash outflow = $560,000Total initial outflow (Io) = $3,300,000Tax rate = 40%Annual cash act of operations excluding wear and tear = I1 = Ia*(1 ? 0.4) = $336,000Cash effect of depreciation: saving(a) of income taxes = I2 = Io*0.4 = $1,320,000Present value of annuity of $1 at a discount rate of 8% for 20 years = PV1 = 9.8181Present value of 10 year MARCS depreciation at a discount rate of 8% = PV2 = 0.7059Cash flowI in $PVPresent Value in $Annual cash effect of operations excluding depreciation336,0009.

8181 3,298,882Cash effect of depreciation: saving of income taxes1,320,0! 000.7059 931,788Total after tax effect on cash 4,230,670Total initial outflow-3,300,0001.0000-3,300,000Net Present Value 930,670Since the after tax NPV is positive at the given discount rate of 8% adding the lift will be a profitable investment. 3. The higher up synopsis tells us that the investment in the lift is... the look into root word does not have a start, a spiritualist and an block and lacks conclusion along with references.. needs a slight human action more improvement If you want to get a plentiful essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper