Frank Plumbing

  

Analyze the “Frank Smith Plumbing’s Financial Statement” spreadsheet.Compare the cost of the truck to the cash flow recordsCompile your calculations in a Microsoft® Excel® document
frank_smith_plumbing.xls

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Frank Smith Plumbing
Project
Cost of Capital (borrowing)
12.00%
Cost of Truck
$200,000
Cost of additional equiment attached to truck
$15,000
Tax rate
35%
Annual Before Tax & Depreciation Truck Projected Earnings

Data Needed for analysis:
Year-1
Year-2
$70,000
$70,000
Depreciation Percentage Rate (MACRS)*
20.0%
32.0%
* The proposed truck has an estimated economic life of seven years but will be treated as a five-year MACRS property
Calculate the following — light yellow highlighted cells need to be co
Year-0
Annual Before Tax & Depreciation Truck Projected Earnings
Depreciation Expense
Annual Before Tax Truck Projected Earnings

Tax
Annual Projected Truck Earnings

Year-1
Year-2

Depreciation to add back
Projected Truck Net Cash Flow
Decision Criteria:
Pay Back Period
Discounted Pay Back Period (DPB)**
Net Present Value
Internal Rate of Return
Profitability Index
Years
Years
Discounted Cash Flow Needed for DPB Calc.
Recommendations:
mith Plumbing
ded for analysis:
Year-3
Year-4
Year-5
Year-6
Year-7
Year-8
$65,000
$60,000
$55,000
$50,000
$40,000
$30,000
19.2%
11.5%
11.5%
5.8%
ted as a five-year MACRS property for depreciation purposes.
0.0%
0.0%
Year-7
Year-8
ow highlighted cells need to be completed
sion Criteria:
mmendations:
Year-3
Year-4
Year-5
Year-6

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