Frank Smith Plumbing Project
Frank Smith PlumbingProjectData Needed for analysis:Year-1Year-2Cost of Capital (borrowing)6.50%Cost of Truck$175,000Cost of additional equiment attached to truck$15,000Tax rate35%Annual Before Tax & Depreciation Truck Projected Earnings$68,000$74,000Depreciation 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 propertyCalculate the following — light yellow highlighted cells need to be coYear-0Annual Before Tax & Depreciation Truck Projected EarningsDepreciation ExpenseAnnual Before Tax Truck Projected Earnings→TaxAnnual Projected Truck Earnings→12Depreciation to add backProjected Truck Net Cash Flowcumulative cash flowdiscounted cash flowcumulative discounted cash flowDecision Criteria:Pay Back PeriodDiscounted Pay Back Period (DPB)**Net Present ValueInternal Rate of ReturnProfitability IndexYearsYearsRecommendations:mith Plumbingded for analysis:Year-3$78,000Year-4Year-5$80,000$84,000Year-6Year-7Year-8$83,000$84,000$85,00019.2%11.5%11.5%5.8%ed as a five-year MACRS property for depreciation purposes.0.0%0.0%ow highlighted cells need to be completedsion Criteria:mmendations:345678
