# Incremental Cash Flow Spreadsheet by irb16338

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```									  Student instructions: This worksheet is for problem 11-9 on page 329. Information necessary to solve the problem
is listed below in the section marked "assumptions." Below, in the incremental cash flow section, enter values and
formulas in the blanks where indicated to complete the calculations needed to answer the question. Finally, at the
bottom of the spreadsheet, enter the appropriate formulas to calculate the NPV and IRR of the investment.

PROBLEM 11-9

ASSUMPTIONS:
Yr 1          Yr 2         Yr 3        Yr 4        Yr 5        Yr 6       Yr 7    Yr 8
MACRS Depreciation       14.3%         24.5%        17.5%       12.5%        8.9%        8.9%       8.9%    4.5%

Tax rate       35%
Cost of capital      12%

ESTIMATED INCREMENTAL CASH FLOWS:

Initial Investment at t=0:

Crew transport & wreckage collection
Transport to restoration facility
Plane restoration
Total Initial Investment

Year:          1            2            3           4           5              6      7

New Revenues
Depreciation on plane
Change in Operating Income
Tax on new income
Change in Earnings after tax

Net Incremental Cash Flows

Additional Cash Flows at the end of year 7:

Proceeds from sale of plane
Book value of plane
Taxable gain(loss)
Tax on gain

Net cash flow from sale of plane
(Salvage value less tax on gain)

SUMMARY OF NET CASH FLOWS:
Time:           0            1            2           3           4              5      6       7

Net present Value:

Internal rate of Return:

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