Four years ago, a company invested in equipment having an initial cost of $1,250,000 and a 6-year technological life. Revenues and expenses are…

3. Four years ago, a company invested in equipment having an initial cost of $1,250,000 and a 6-year technological life. Revenues and expenses are shown in the table below. Sales were not as good as projected, and the company is considering terminating the project. The equipment has been depreciated using MACRS with a GDS property class of 5 years. The state in which the firm operates imposes an 8% corporate income tax. The firm has federal taxable income in the $10,000,000 to $15,000,000 bracket and uses a 10% MARR market hurdle rate for investments. Determine by annual cash flow analysis the NPW, EUAW, and IRR of terminating the project at the end of year 4.

Year Revenue

  1. 1 $782,550
  2. 2 $783,800
  3. 3 $755,400
  4. 4 $704,150

Expenses $429,850

$362,400

$388,200

$406,450

Equipment Market Value

$ 400,000 

This is should be made in MS Excel workbook