PROBLEM 10.50
BASIS $1,400,000.00 REAL BTCF $400,000.00 INFL RATE= 4.20%
EST SALV $200,000.00 BTCF INCR $0.00 TAX RATE 40.00%
RCVD SALV $200,000.00 USEFUL LIFE 8
MARRr=10.00%
PERIODS 8
MARRc=14.62%
EOY REAL BTCF REAL DWO TI T REAL ATCF MACRS(5)
0 -$1,400,000.00 -$1,400,000.00
1 $400,000.00 $268,714.01 $131,285.99 $52,514.40 $347,485.60 20.00%
2 $400,000.00 $412,612.69 -$12,612.69 -$5,045.07 $405,045.07 32.00%
3 $400,000.00 $237,588.88 $162,411.12 $64,964.45 $335,035.55 19.20%
4 $400,000.00 $136,807.42 $263,192.58 $105,277.03 $294,722.97 11.52%
5 $400,000.00 $131,293.11 $268,706.89 $107,482.76 $292,517.24 11.52%
6 $400,000.00 $63,000.53 $336,999.47 $134,799.79 $265,200.21 5.76%
7 $400,000.00 $0.00 $400,000.00 $160,000.00 $240,000.00
8 $600,000.00 $0.00 $600,000.00 $240,000.00 $360,000.00
SUM DEPR
MARRr=10.00% SUM MACRS
$1,250,016.63
PW$C = $326,090.32 100.00%
BOOK VALUE
FW$C = $699,003.57
$0.00
AW$C = $61,123.68
IRRr = 16.49%
ERRr = 12.92% ERRr = 12.92%
IRRc = 21.38%
ERRc = 17.66%
a AS SHOWN
b
PW$C = $326,090.32
c
AW$C = $61,123.68
d
FW$C = $699,003.57
e
IRRr = 16.49%
f
ERRr = 12.92%
g
IRRc = 21.38%
h
ERRc = 17.66%
PROBLEM 10.51
BASIS $190,000.00 ACTUAL BTCF $45,000.00 INFL RATE= 4.20%
EST SALV $5,000.00 BTCF INCR $0.00 TAX RATE 40.00%
RCVD SALV $5,000.00 USEFUL LIFE 12
MARRr=10.00%
PERIODS 12
MARRc=14.62%
EOY REAL BTCF DWO TI T REAL ATCF MACRS(7)
0-$190,000.00 -$190,000.00
1$43,186.18 $26,056.62 $17,129.56 $6,851.82 $36,334.36 14.29%
2$41,445.47 $42,855.54 -$1,410.07 -$564.03 $42,009.50 24.49%
3$39,774.92 $29,372.46 $10,402.47 $4,160.99 $35,613.94 17.49%
4$38,171.71 $20,130.06 $18,041.65 $7,216.66 $30,955.05 12.49%
5$36,633.12 $13,812.31 $22,820.81 $9,128.32 $27,504.80 8.93%
6$35,156.55 $13,240.74 $21,915.81 $8,766.32 $26,390.22 8.92%
7$33,739.49 $12,721.29 $21,018.20 $8,407.28 $25,332.21 8.93%
8$32,379.55 $6,097.43 $26,282.12 $10,512.85 $21,866.70 4.46%
9$31,074.42 $0.00 $31,074.42 $12,429.77 $18,644.65
10 $29,821.90 $0.00 $29,821.90 $11,928.76 $17,893.14
11 $28,619.87 $0.00 $28,619.87 $11,447.95 $17,171.92
PROBLEM 10.52
BASIS $190,000.00 ACTUAL BTCF $45,000.00 INFL RATE= 4.20%
EST SALV $5,000.00 BTCF INCR $0.00 TAX RATE 40.00%
RCVD SALV $5,000.00 USEFUL LIFE 12
MARRr=10.00%
PERIODS 12
MARRc=14.62%
EOY ACTUAL BTCF DWO TI T ACTUAL ATCF MACRS(7)
0-$190,000.00 -$190,000.00
1$45,000.00 $27,151.00 $17,849.00 $7,139.60 $37,860.40 14.29%
2$45,000.00 $46,531.00 -$1,531.00 -$612.40 $45,612.40 24.49%
3$45,000.00 $33,231.00 $11,769.00 $4,707.60 $40,292.40 17.49%
4$45,000.00 $23,731.00 $21,269.00 $8,507.60 $36,492.40 12.49%
5$45,000.00 $16,967.00 $28,033.00 $11,213.20 $33,786.80 8.93%
6$45,000.00 $16,948.00 $28,052.00 $11,220.80 $33,779.20 8.92%
7$45,000.00 $16,967.00 $28,033.00 $11,213.20 $33,786.80 8.93%
8$45,000.00 $8,474.00 $36,526.00 $14,610.40 $30,389.60 4.46%
9$45,000.00 $0.00 $45,000.00 $18,000.00 $27,000.00
10 $45,000.00 $0.00 $45,000.00 $18,000.00 $27,000.00
11 $45,000.00 $0.00 $45,000.00 $18,000.00 $27,000.00
PW$T = $7,483.92
BOOK VALUE
FW$T = $38,481.69
$0.00
AW$T = $1,358.31
IRRc=15.61%
ERRc=14.99% ERRc=14.99%
a AS SHOWN
d
FW$T = $38,481.69
PROBLEM 10.53
COST BASIS = $500,000
INCOME TAX RATE = 40%
INFLATION RATE = 3%
REAL ATMARR = 8%
MACRS PROPERTY CLASS = 5
a) EOY $CBTCF $TBTCF $TDWO $TTI $TT $TATCF $CATCF
0 -$500,000.00
-$500,000.00 -$500,000.00
1 $120,000.00 $123,600.00 $100,000.00 $23,600.00 $9,440.00 $114,160.00 $110,834.95
2 $120,000.00 $127,308.00 $160,000.00 -$32,692.00 -$13,076.80 $140,384.80 $132,326.14
3 $120,000.00 $131,127.24 $96,000.00 $35,127.24 $14,050.90 $117,076.34 $107,141.44
4 $220,000.00 $247,611.94 $28,800.00 $103,611.94 $41,444.78 $206,167.16 $183,176.85
$TB4 = $115,200.00
or EOY $CBTCF $CTDWO $CTI $CT $CATCF
0 -$500,000.00
-$500,000.00
1 $120,000.00 $97,087.38 $22,912.62 $9,165.05 $110,834.95
2 $120,000.00 $150,815.35 -$30,815.35 -$12,326.14 $132,326.14
3 $120,000.00 $87,853.60 $32,146.40 $12,858.56 $107,141.44
4 $220,000.00 $25,588.43 $92,057.87 $36,823.15 $183,176.85
$TB4 = $102,353.71 =(500000*(0.1152/2+0.1152+0.0576))/1.03^4
b) PW = -$64,233.92
or PW = -$64,233.92
c)
IRRr = 2.463%
PROBLEM 10.54
COST BASIS = $600,000
INCOME TAX RATE = 40%
INFLATION RATE = 3%
REAL ATMARR = 10%
MACRS PROPERTY CLASS = 3
a) EOY $CBTCF $TBTCF $TDWO $TTI $TT $TATCF $CATCF
0 -$600,000.00 -$600,000.00 -$600,000.00
1 $200,000.00 $206,000.00 $199,980.00 $6,020.00 $2,408.00 $203,592.00 $197,662.14
2 $200,000.00 $212,180.00 $266,700.00 -$54,520.00 -$21,808.00 $233,988.00 $220,556.13
3 $200,000.00 $218,545.40 $88,860.00 $129,685.40 $51,874.16 $166,671.24 $152,527.80
4 $200,000.00 $225,101.76 $44,460.00 $180,641.76 $72,256.70 $152,845.06 $135,800.85
5 $400,000.00 $463,709.63 $0.00 $463,709.63 $185,483.85 $278,225.78 $240,000.00
or EOY $CBTCF $CTDWO $CTI $CT $CATCF
0 -$600,000.00 -$600,000.00
1 $200,000.00 $194,155.34 $5,844.66 $2,337.86 $197,662.14
2 $200,000.00 $251,390.33 -$51,390.33 -$20,556.13 $220,556.13
3 $200,000.00 $81,319.49 $118,680.51 $47,472.20 $152,527.80
4 $200,000.00 $39,502.13 $160,497.87 $64,199.15 $135,800.85
5 $400,000.00 $0.00 $400,000.00 $160,000.00 $240,000.00
b) PW = $118,341.96
or PW = $118,341.96
c)
IRRr = 17.529%
PROBLEM 10.55
COST BASIS = $125,000
INCOME TAX RATE = 40%
INFLATION RATE = 3%
REAL ATMARR = 9%
MACRS PROPERTY CLASS = 3
a) EOY $TBTCF $TDWO $TTI $TT $TATCF $CATCF
0
-$125,000.00 -$125,000.00 -$125,000.00
1$50,000.00 $25,000.00 $25,000.00 $10,000.00 $40,000.00 $38,834.95
2$60,000.00 $40,000.00 $20,000.00 $8,000.00 $52,000.00 $49,014.99
3$70,000.00 $24,000.00 $46,000.00 $18,400.00 $51,600.00 $47,221.31
4$80,000.00 $14,400.00 $65,600.00 $26,240.00 $53,760.00 $47,765.06
5$120,000.00 $7,200.00 $98,400.00 $39,360.00 $80,640.00 $69,560.77
$TB5 = $14,400.00
or EOY $TBTCF $CBTCF $CTDWO $CTI $CT $CATCF
0
-$125,000.00 –$125,000.00 -$125,000.00
1$50,000.00 $48,543.69 $24,271.84 $24,271.84 $9,708.74 $38,834.95
2$60,000.00 $56,555.75 $37,703.84 $18,851.92 $7,540.77 $49,014.99
3$70,000.00 $64,059.92 $21,963.40 $42,096.52 $16,838.61 $47,221.31
4$80,000.00 $71,078.96 $12,794.21 $58,284.75 $23,313.90 $47,765.06
5$120,000.00 $103,513.05 $6,210.78 $84,880.70 $33,952.28 $69,560.77
$CB5 = $12,421.57
b) PW = $67,394.55
or PW = $67,394.55
c)
IRRr = 26.421%
PROBLEM 10.56
COST BASIS = $800,000
INCOME TAX RATE = 40%
INFLATION RATE = 5%
REAL ATMARR = 10%
MACRS PROPERTY CLASS = 5
a) EOY $CBTCF $CDWO $CTI $CT $CATCF
0 -$800,000.00 -$800,000.00
1$125,000.00 $152,380.95 -$27,380.95 -$10,952.38 $135,952.38
2$150,000.00 $232,199.55 -$82,199.55 -$32,879.82 $182,879.82
3$175,000.00 $132,685.46 $42,314.54 $16,925.82 $158,074.18
4$200,000.00 $75,820.26 $124,179.74 $49,671.90 $150,328.10
5$225,000.00 $72,209.77 $152,790.23 $61,116.09 $163,883.91
6$250,000.00 $34,385.61 $215,614.39 $86,245.76 $163,754.24
7$375,000.00 $0.00 $375,000.00 $150,000.00 $225,000.00
b) PW = $5,827.60
c)
IRRr = 10.210%
PROBLEM 10.57
COST BASIS = $250,000
INCOME TAX RATE = 40%
INFLATION RATE = 4%
REAL ATMARR = 8%
MACRS PROPERTY CLASS = 5
a) EOY $CBTCF $TBTCF $TDWO $TTI $TT $TATCF $CATCF
0 -$250,000.00 -$250,000.00 -$250,000.00
1 $50,000.00 $52,000.00 $50,000.00 $2,000.00 $800.00 $51,200.00 $49,230.77
2 $50,000.00 $54,080.00 $80,000.00 -$25,920.00 -$10,368.00 $64,448.00 $59,585.80
3 $50,000.00 $56,243.20 $48,000.00 $8,243.20 $3,297.28 $52,945.92 $47,068.73
4 $50,000.00 $58,492.93 $28,800.00 $29,692.93 $11,877.17 $46,615.76 $39,847.34
5 $50,000.00 $60,832.65 $28,800.00 $32,032.65 $12,813.06 $48,019.59 $39,468.60
6 $50,000.00 $63,265.95 $14,400.00 $48,865.95 $19,546.38 $43,719.57 $34,552.21
7 $100,000.00 $131,593.18 $131,593.18 $52,637.27 $78,955.91 $60,000.00
or EOY $CBTCF $CTDWO $CTI $CT $CATCF
0 -$250,000.00 -$250,000.00
1 $50,000.00 $48,076.92 $1,923.08 $769.23 $49,230.77
2 $50,000.00 $73,964.50 -$23,964.50 -$9,585.80 $59,585.80
3 $50,000.00 $42,671.83 $7,328.17 $2,931.27 $47,068.73
4 $50,000.00 $24,618.36 $25,381.64 $10,152.66 $39,847.34
5 $50,000.00 $23,671.50 $26,328.50 $10,531.40 $39,468.60
6 $50,000.00 $11,380.53 $38,619.47 $15,447.79 $34,552.21
7 $100,000.00 $100,000.00 $40,000.00 $60,000.00
b) PW = -$3,032.23
c)
IRRr = 7.634%
PROBLEM 10.59
INFLATION RATE 3.80%
COMBINED MARR 9.00%
REAL MARR 5.01%
AMOUNT BORROWED $160,000.00
LOAN INTEREST RATE 8.50%
LOAN PERIOD YEARS 5
INTEREST TOTAL $ OWED TOTAL $ OWED PW REAL PW
REPAYMENT ACCRUED BEFORE YEARLY INTEREST PRINCIPAL TOTAL AFTER YEARLY CURRENT TOTAL REAL
METHOD EOY DURING YR PAYMENT PAYMENT PAYMENT PAYMENT PAYMENT $ PAYMENT $
a 1 0 $160,000.00
1 $13,600.00 $173,600.00 $13,600.00 $0.00 $13,600.00 $160,000.00 $13,102.12
2 $13,600.00 $173,600.00 $13,600.00 $0.00 $13,600.00 $160,000.00 $12,622.47
3 $13,600.00 $173,600.00 $13,600.00 $0.00 $13,600.00 $160,000.00 $12,160.37
4 $13,600.00 $173,600.00 $13,600.00 $0.00 $13,600.00 $160,000.00 $11,715.19
5 $13,600.00 $173,600.00 $13,600.00 $160,000.00 $173,600.00 $0.00 $156,888.28 $144,066.48 $156,888.28
b 2 0 $160,000.00
1 $13,600.00 $173,600.00 $13,600.00 $32,000.00 $45,600.00 $128,000.00 $43,930.64
2 $10,880.00 $138,880.00 $10,880.00 $32,000.00 $42,880.00 $96,000.00 $39,797.89
3 $8,160.00 $104,160.00 $8,160.00 $32,000.00 $40,160.00 $64,000.00 $35,908.86
4 $5,440.00 $69,440.00 $5,440.00 $32,000.00 $37,440.00 $32,000.00 $32,251.24
5 $2,720.00 $34,720.00 $2,720.00 $32,000.00 $34,720.00 $0.00 $158,026.05 $28,813.30 $158,026.05
c 3 0 $160,000.00
1 $13,600.00 $173,600.00 $13,600.00 $27,002.52 $40,602.52 $132,997.48 $39,116.11
2 $11,304.79 $144,302.27 $11,304.79 $29,297.73 $40,602.52 $103,699.75 $37,684.11
3 $8,814.48 $112,514.22 $8,814.48 $31,788.04 $40,602.52 $71,911.70 $36,304.54
4 $6,112.49 $78,024.20 $6,112.49 $34,490.03 $40,602.52 $37,421.68 $34,975.47
5 $3,180.84 $40,602.52 $3,180.84 $37,421.68 $40,602.52 $0.00 $157,929.64 $33,695.06 $157,929.64
d 4 0 $160,000.00
1 $13,600.00 $173,600.00 $0.00 $0.00 $0.00 $173,600.00 $0.00
2 $14,756.00 $188,356.00 $0.00 $0.00 $0.00 $188,356.00 $0.00
3 $16,010.26 $204,366.26 $0.00 $0.00 $0.00 $204,366.26 $0.00
4 $17,371.13 $221,737.39 $0.00 $0.00 $0.00 $221,737.39 $0.00
5 $18,847.68 $240,585.07 $80,585.07 $160,000.00 $240,585.07 $0.00 $156,363.79 $199,655.79 $156,363.79
PROBLEM 10.60
INFLATION RATE 3.80%
COMBINED MARR 9.00%
REAL MARR 5.01%
AMOUNT BORROWED $160,000.00
LOAN INTEREST RATE 8.50%
LOAN PERIOD YEARS 5
INTEREST TOTAL $ OWED TOTAL $ OWED PW REAL PW
REPAYMENT ACCRUED
BEFORE YEAR
INTEREST PRINCIPAL TOTAL AFTER YEARLY CURRENT TOTAL REAL
METHOD EOY DURING YR PAYMENT PAYMENT PAYMENT PAYMENT PAYMENT $ PAYMENT $
a 1 0 $160,000.00
1 $13,600.00 $173,600.00 $13,600.00 $0.00 $13,600.00 $160,000.00 $13,102.12
2 $13,600.00 $173,600.00 $13,600.00 $0.00 $13,600.00 $160,000.00 $12,622.47
3 $13,600.00 $173,600.00 $13,600.00 $0.00 $13,600.00 $160,000.00 $12,160.37
4 $13,600.00 $173,600.00 $13,600.00 $0.00 $13,600.00 $160,000.00 $11,715.19
5 $13,600.00 $173,600.00 $13,600.00 $160,000.00 $173,600.00 $0.00 $156,888.28 $144,066.48 $156,888.28
b 2 0 $160,000.00
1 $13,600.00 $173,600.00 $13,600.00 $32,000.00 $45,600.00 $128,000.00 $43,930.64
2 $10,880.00 $138,880.00 $10,880.00 $32,000.00 $42,880.00 $96,000.00 $39,797.89
3 $8,160.00 $104,160.00 $8,160.00 $32,000.00 $40,160.00 $64,000.00 $35,908.86
4 $5,440.00 $69,440.00 $5,440.00 $32,000.00 $37,440.00 $32,000.00 $32,251.24
5 $2,720.00 $34,720.00 $2,720.00 $32,000.00 $34,720.00 $0.00 $158,026.05 $28,813.30 $158,026.05
c 3 0 $160,000.00
1 $13,600.00 $173,600.00 $13,600.00 $27,002.52 $40,602.52 $132,997.48 $39,116.11
2 $11,304.79 $144,302.27 $11,304.79 $29,297.73 $40,602.52 $103,699.75 $37,684.11
3 $8,814.48 $112,514.22 $8,814.48 $31,788.04 $40,602.52 $71,911.70 $36,304.54
4 $6,112.49 $78,024.20 $6,112.49 $34,490.03 $40,602.52 $37,421.68 $34,975.47
5 $3,180.84 $40,602.52 $3,180.84 $37,421.68 $40,602.52 $0.00 $157,929.64 $33,695.06 $157,929.64
d 4 0 $160,000.00
1 $13,600.00 $173,600.00 $0.00 $0.00 $0.00 $173,600.00 $0.00
2 $14,756.00 $188,356.00 $0.00 $0.00 $0.00 $188,356.00 $0.00
3 $16,010.26 $204,366.26 $0.00 $0.00 $0.00 $204,366.26 $0.00
4 $17,371.13 $221,737.39 $0.00 $0.00 $0.00 $221,737.39 $0.00
5 $18,847.68 $240,585.07 $80,585.07 $160,000.00 $240,585.07 $0.00 $156,363.79 $199,655.79 $156,363.79
LOAN INTEREST RATE PW METH 1 PW METH 2 PW METH 3 PW METH 4 PREFERRED YES, THIS MATCHES TEXT
8.50% $156,888.28 $158,026.05 $157,929.64 $156,363.79 4
5.00% $135,106.23 $144,208.37 $143,745.83 $132,719.27 4
6.00% $141,329.67 $148,156.28 $147,742.27 $139,160.77 4
7.00% $147,553.12 $152,104.19 $151,783.96 $145,849.98 4
8.00% $153,776.56 $156,052.09 $155,870.12 $152,793.99 4
9.00% $160,000.00 $160,000.00 $160,000.00 $160,000.00 ALL SAME
10.00% $166,223.44 $163,947.91 $164,172.83 $167,475.36 2
11.00% $172,446.88 $167,895.81 $168,387.86 $175,227.55 2
12.00% $178,670.33 $171,843.72 $172,644.34 $183,264.19 2
13.00% $184,893.77 $175,791.63 $176,941.51 $191,593.03 2
14.00% $191,117.21 $179,739.53 $181,278.63 $200,221.98 2
15.00% $197,340.65 $183,687.44 $185,654.95 $209,159.07 2
PROBLEM 10.61
INFLATION RATE 3.90%
COMBINED MARR 17.00%
REAL MARR 12.61%
AMOUNT BORROWED $500,000.00
LOAN INTEREST RATE 10.00%
LOAN PERIOD YEARS 4
INTEREST TOTAL $ OWED TOTAL $ OWED PW REAL PW
REPAYMENT ACCRUED BEFORE YEARLY INTEREST PRINCIPAL TOTAL AFTER YEARLY CURRENT TOTAL REAL
METHOD EOY DURING YR PAYMENT PAYMENT PAYMENT PAYMENT PAYMENT $ PAYMENT $
1 0 $500,000.00
1 $50,000.00 $550,000.00 $50,000.00 $0.00 $50,000.00 $500,000.00 $48,123.20
2 $50,000.00 $550,000.00 $50,000.00 $0.00 $50,000.00 $500,000.00 $46,316.84
3 $50,000.00 $550,000.00 $50,000.00 $0.00 $50,000.00 $500,000.00 $44,578.29
4 $50,000.00 $550,000.00 $50,000.00 $500,000.00 $550,000.00 $0.00 $403,986.77 $471,954.90 $403,986.77
2 0 $500,000.00
1 $50,000.00 $550,000.00 $50,000.00 $125,000.00 $175,000.00 $375,000.00 $168,431.18
2 $37,500.00 $412,500.00 $37,500.00 $125,000.00 $162,500.00 $250,000.00 $150,529.73
3 $25,000.00 $275,000.00 $25,000.00 $125,000.00 $150,000.00 $125,000.00 $133,734.86
4 $12,500.00 $137,500.00 $12,500.00 $125,000.00 $137,500.00 $0.00 $435,313.57 $117,988.72 $435,313.57
3 0 $500,000.00
1 $50,000.00 $550,000.00 $50,000.00 $107,735.40 $157,735.40 $392,264.60 $151,814.63
2 $39,226.46 $431,491.06 $39,226.46 $118,508.94 $157,735.40 $273,755.66 $146,116.10
3 $27,375.57 $301,131.22 $27,375.57 $130,359.84 $157,735.40 $143,395.82 $140,631.48
4 $14,339.58 $157,735.40 $14,339.58 $143,395.82 $157,735.40 $0.00 $432,705.28 $135,352.72 $432,705.28
4 0 $500,000.00
1 $50,000.00 $550,000.00 $0.00 $0.00 $0.00 $550,000.00 $0.00
2 $55,000.00 $605,000.00 $0.00 $0.00 $0.00 $605,000.00 $0.00
3 $60,500.00 $665,500.00 $0.00 $0.00 $0.00 $665,500.00 $0.00
4 $66,550.00 $732,050.00 $232,050.00 $500,000.00 $732,050.00 $0.00 $390,658.52 $628,171.97 $390,658.52
PROBLEM 10.62
INFLATION RATE 3.90%
COMBINED MARR 17.00%
REAL MARR 12.61%
AMOUNT BORROWED $500,000.00
LOAN INTEREST RATE 10.00%
LOAN PERIOD YEARS 4
INTEREST TOTAL $ OWED TOTAL $ OWED PW REAL PW
REPAYMENT ACCRUED BEFORE YEARLY INTEREST PRINCIPAL TOTAL AFTER YEARLY CURRENT TOTAL REAL
METHOD EOY DURING YR PAYMENT PAYMENT PAYMENT PAYMENT PAYMENT $ PAYMENT $
a 1 0 $500,000.00
1$50,000.00 $550,000.00 $50,000.00 $0.00 $50,000.00 $500,000.00 $48,123.20
2$50,000.00 $550,000.00 $50,000.00 $0.00 $50,000.00 $500,000.00 $46,316.84
3$50,000.00 $550,000.00 $50,000.00 $0.00 $50,000.00 $500,000.00 $44,578.29
4$50,000.00 $550,000.00 $50,000.00 $500,000.00 $550,000.00 $0.00 $403,986.77 $471,954.90 $403,986.77
b 2 0 $500,000.00
1$50,000.00 $550,000.00 $50,000.00 $125,000.00 $175,000.00 $375,000.00 $168,431.18
2$37,500.00 $412,500.00 $37,500.00 $125,000.00 $162,500.00 $250,000.00 $150,529.73
3$25,000.00 $275,000.00 $25,000.00 $125,000.00 $150,000.00 $125,000.00 $133,734.86
4$12,500.00 $137,500.00 $12,500.00 $125,000.00 $137,500.00 $0.00 $435,313.57 $117,988.72 $435,313.57
c 3 0 $500,000.00
1$50,000.00 $550,000.00 $50,000.00 $107,735.40 $157,735.40 $392,264.60 $151,814.63
2$39,226.46 $431,491.06 $39,226.46 $118,508.94 $157,735.40 $273,755.66 $146,116.10
3$27,375.57 $301,131.22 $27,375.57 $130,359.84 $157,735.40 $143,395.82 $140,631.48
4$14,339.58 $157,735.40 $14,339.58 $143,395.82 $157,735.40 $0.00 $432,705.28 $135,352.72 $432,705.28
d 4 0 $500,000.00
1$50,000.00 $550,000.00 $0.00 $0.00 $0.00 $550,000.00 $0.00
2$55,000.00 $605,000.00 $0.00 $0.00 $0.00 $605,000.00 $0.00
3$60,500.00 $665,500.00 $0.00 $0.00 $0.00 $665,500.00 $0.00
4$66,550.00 $732,050.00 $232,050.00 $500,000.00 $732,050.00 $0.00 $390,658.52 $628,171.97 $390,658.52
LOAN INTEREST RATE PW METH 1 PW METH 2 PW METH 3 PW METH 4 PREFERRED
10.00% $403,986.77 $435,313.57 $432,705.28 $390,658.52 4
7.00% $362,838.25 $407,590.81 $404,940.05 $349,753.18 4
8.00% $376,554.42 $416,831.73 $414,119.86 $363,012.50 4
9.00% $390,270.60 $426,072.65 $423,375.34 $376,645.30 4
10.00% $403,986.77 $435,313.57 $432,705.28 $390,658.52 4
11.00% $417,702.95 $444,554.49 $442,108.47 $405,059.17 4
12.00% $431,419.12 $453,795.40 $451,583.72 $419,854.34 4
13.00% $445,135.30 $463,036.32 $461,129.85 $435,051.16 4
14.00% $458,851.47 $472,277.24 $470,745.69 $450,656.84 4
15.00% $472,567.65 $481,518.16 $480,430.09 $466,678.63 4
16.00% $486,283.82 $490,759.08 $490,181.90 $483,123.89 4
17.00% $500,000.00 $500,000.00 $500,000.00 $500,000.00 ALL SAME
18.00% $513,716.18 $509,240.92 $509,883.27 $517,314.42 2
19.00% $527,432.35 $518,481.84 $519,830.60 $535,074.68 2
20.00% $541,148.53 $527,722.76 $529,840.92 $553,288.37 2
PROBLEM 10.63
BASIS $9,000,000.00 LOAN PRINC $4,000,000.00 REAL BTCF $6,000,000.00 TAX RATE 40.00% INFL RATE= 4.00%
EST SALV $700,000.00 LOAN PERIOD 6 BTCF INCR -$1,000,000.00 USEFUL LIFE 6
MARRr=18.00%
RCVD SALV $700,000.00 LOAN INT 12.00% METHOD 1 PERIODS 6
MARRc=22.72%
EOY $TBTLCF $TPPMT $TIPMT $TDWO $TTI $Ttax $TATCF $TATCF+ $TATCF- $TATCF MACRS(5)
0 -$9,000,000.00 -$4,000,000.00 -$5,000,000.00 $0.00 $5,000,000.00 -$5,000,000.00
1 $6,240,000.00 $0.00 $480,000.00 $1,800,000.00 $3,960,000.00 $1,584,000.00 $4,176,000.00 $4,176,000.00 $0.00 $0.00 20.00%
2 $5,408,000.00 $0.00 $480,000.00 $2,880,000.00 $2,048,000.00 $819,200.00 $4,108,800.00 $4,108,800.00 $0.00 $0.00 32.00%
3 $4,499,456.00 $0.00 $480,000.00 $1,728,000.00 $2,291,456.00 $916,582.40 $3,102,873.60 $3,102,873.60 $0.00 $0.00 19.20%
4 $3,509,575.68 $0.00 $480,000.00 $1,036,800.00 $1,992,775.68 $797,110.27 $2,232,465.41 $2,232,465.41 $0.00 $0.00 11.52%
5 $2,433,305.80 $0.00 $480,000.00 $1,036,800.00 $916,505.80 $366,602.32 $1,586,703.48 $1,586,703.48 $0.00 $0.00 11.52%
6 $2,151,042.33 $4,000,000.00 $480,000.00 $518,400.00 $1,152,642.33 $461,056.93 -$2,790,014.60 $0.00 $2,790,014.60 $29,196,677.42 5.76%
SUM DEPR
MARRc=22.72%
$9,000,000.00
PW$T = $3,547,544.14
BOOK VALUE
FW$T = $12,117,691.37
$0.00
AW$T = $1,139,640.14
IRRc=65.45%
ERRc=34.19% ERRc=34.19%
IRRr=59.09%
ERRr=29.03%
a AS SHOWN
b
PW$T = $3,547,544.14
c
AW$T = $1,139,640.14
d
FW$T = $12,117,691.37
e
IRRc=65.45%
f
ERRc=34.19%
g
IRRr=59.09%
h
ERRr=29.03%
PROBLEM 10.64
BASIS $9,000,000.00 LOAN PRINC $4,000,000.00 REAL BTCF $6,000,000.00 TAX RATE 40.00% INFL RATE= 4.00%
EST SALV $700,000.00 LOAN PERIOD 6 BTCF INCR -$1,000,000.00 USEFUL LIFE 6
MARRr=18.00%
RCVD SALV $700,000.00 LOAN INT 12.00% METHOD 1 PERIODS 6
MARRc=22.72%
EOY $RBTLCF $RPPMT $RIPMT $RDWO $RTI $RTax $RATCF $RATCF+ $RATCF- $RATCF MACRS(5)
0 -$9,000,000.00 -$4,000,000.00 -$5,000,000.00 $0.00 $5,000,000.00 -$5,000,000.00
1 $6,000,000.00 $0.00 $461,538.46 $1,730,769.23 $3,807,692.31 $1,523,076.92 $4,015,384.62 $4,015,384.62 $0.00 $0.00 20.00%
2 $5,000,000.00 $0.00 $443,786.98 $2,662,721.89 $1,893,491.12 $757,396.45 $3,798,816.57 $3,798,816.57 $0.00 $0.00 32.00%
3 $4,000,000.00 $0.00 $426,718.25 $1,536,185.71 $2,037,096.04 $814,838.42 $2,758,443.33 $2,758,443.33 $0.00 $0.00 19.20%
4 $3,000,000.00 $0.00 $410,306.01 $886,260.99 $1,703,433.00 $681,373.20 $1,908,320.79 $1,908,320.79 $0.00 $0.00 11.52%
5 $2,000,000.00 $0.00 $394,525.01 $852,174.02 $753,300.96 $301,320.39 $1,304,154.60 $1,304,154.60 $0.00 $0.00 11.52%
6 $1,700,000.00 $3,161,258.10 $379,350.97 $409,699.05 $910,949.98 $364,379.99 -$2,204,989.07 $0.00 $2,204,989.07 $23,074,558.27 5.76%
SUM DEPR
MARRr=18.00% SUM
$8,077,810.89
PW$C = $3,547,544.14 100.00%
BOOK VALUE
FW$C = $9,576,787.51
$0.00
AW$C = $1,014,278.80
IRRr = 59.09%
ERRr = 29.03% ERRr = 29.03%
IRRc = 65.45%
ERRc = 34.19%
a AS SHOWN
b
PW$C = $3,547,544.14
c
AW$C = $1,014,278.80
d
FW$C = $9,576,787.51
e
IRRr = 59.09%
f
ERRr = 29.03%
g
IRRc = 65.45%
h
ERRc = 34.19%