Swot Analysis of Mercury Drug Store

Questions ON PROBLEM 1 a. Determine the disparagement associated with the new equipment, as well as the unused dispraise on the old equipment. b. Determine the bills inflows (after depreciation and taxes) associated with the new equipment. c. Determine the gold outflows associated with the equipment. Show each of the items that would appear in the T-account. Then show twain(prenominal) the cash inflows and cash outflows in the T-account. d. Determine (1) the net present value, (2) the advantageousness index, (3) the national rate of return, and (4) the payback period of the proposed project. wear and tear USING MACRS card ( naked EQUIPMENT) ST YR 75,000. 00 X 33. 33% = 24,997. 50 second Yr 75,000. 00 x 44. 45% = 33,3337. 50 3rd Yr. 75,000. 00 x 14. 81 % = 11,107. 50 fourth yr 75,000. 00 x 7. 41 % = 5,557. 50 DEPRECIATION USING MACRS give in (NEW EQUIPMENT) initiatory YR 50,000. 00 X 33. 33% = 16,665 second Yr 50,000. 00 x 44. 45% = 22,225. 00 3rd Yr. 50,000. 00 x 14. 81 % = 7,405. 00 4th yr 50,000. 00 x 7. 41 % = 3,705. 00 16,665. 00 + 22,225. 00 + 7,405. 00 = 46,295. 00 16,665. 00 + 22,225. 00 + 7,405. 00 = 46,295. 00 50,000. 00 46,495 = 3,705. 00 Unused depreciation on old equipment specie IN take to the woodsS/CASH OUTFLOWS FOR NEW EQUIPMENT 1ST course essence savings 30,000. 00 Less disparagement write down 24,997. 50 Freight cost 5,000. 00 workings smashing 3,000. 00 32,997. 50 Income to begin with Tax ( 2,992. 500 ) VVVVVVVVVVVV 2nd socio-economic class nub SAVINGS 30,000. 0 Less Depreciation outlay 33,337. 50 Working Capital (30,000 x 12%) 3,600. 00 36,937. 50 Income forrader Tax ( 6,937. 50) Vvvvvvvvvvv 3rd YEAR tote up SAVINGS 30,000. 00 Less Depreciation Expense 11,107. 50 Working Capital (30,000 x 12%) 3,600. 0 14,707. 50 Income in the first place Tax 15,292. 50 Income Tax (15,292. 50 x 30%) 4,587. 50 clear INCOME 10,705. 00 VVVVVVVVV quaternate YEAR TOTAL SAVINGS 20,000. 0 Less Depreciation Expense 5,557. 50 Working Capital (20,000 x 12%) 2,400. 00 7,957. 50 Income before Tax 12,042. 50 Income Tax (12,042. 50 x 30%) 3,612. 75 NET INCOME 8,429. 5 VVVVVVVVV C A S H FLOW _____________________________________ CASH IN CASH OUT 30,000. 00 75,000. 00 30,000. 00 5,000. 00 30,000. 00 3,000. 00 20,000. 0 3,600. 00 3,600. 00 4,587. 50 3,612. 75 Totals 110,000. 00 98,400. 25 Vvvvvvvvvv vv vvv vvv NET PRESENT VALUE P 1,500. 00 SINCE MACHINE IS fully DEPRECIATED PROFITABILITY world power/INTERNAL RATE OF RETURN 1ST YEAR NONE ND YEAR NONE 3RD YEAR 10,705. 00 / 30,000. 00 = 36% quaternate YEAR 8429. 75 / 20,000. 00 = 42% Payback period starts on the 3RD YEAR.. QUESTIONS ON PROBLEM 2 a. Determine the depreciation associated with the new equipment, as well as the unused depreciation on the old equipment. b. Determine the cash inflows (after depreciation and taxes) associated with the new equipment. c. Determine the cash outflows associated with the equipment. Show each of the items that woul d appear in the T-account. Then show both the cash inflows and cash outflows in the T-account. d.Determine (1) the net present value, (2) the profitability index, (3) the internal rate of return, and (4) the payback period of the proposed project. DEPRECIATION USING MACRS TABLE (NEW electronic computer) 1ST YR 83,000. 00 X 20% = 16,600. 00 2ND Yr 83,000. 00 x 32% = 26,560. 00 3rd Yr. 83,000. 00 x 19. 20 % = 15,936. 00 4th yr 83,000. 00 x 11. 52 % = 9,561. 60 5TH YEAR 83,000. 00 X 11. 52% = 9,561. 60 sixth YEAR 83,000 X 5. 76% = 4,780. 80 TOTAL P 83,000. 00 DEPRECIATION USING MACRS TABLE (OLD COMPUTER) 1ST YR 97,000. 00 X 20% = 19,400. 00 2ND Yr 97,000. 00 x 32% = 31,040. 0 3rd Yr. 97,000. 00 x 19. 20 % = 18,624. 00 4th yr 97,000. 00 x 11. 52 % = 11,174. 40 5TH YEAR 97,000. 00 X 11. 52% = 11,174. 40 6TH YEAR 97,000 X 5. 76% = 5,587. 20 TOTAL P 97,000. 00 UNUSED DEPRECIATION OF OLD COMPUTER IS 5,587. 50 CASH INFLOWS/CASH OUTFLOWS FOR NEW EQUIPMENT 1ST YEAR TOTAL SAVINGS 20,000. 00 L ess Depreciation Expense 16,600 Electrical Wirings 2,300. 0 Working Capital 3,500. 00 22,400. 00 Income before Tax ( 2,400,00 ) VVVVVVVVVVVV 2nd YEAR TOTAL SAVINGS 20,000. 00 Less Depreciation Expense 26,560. 0 Working Capital (20,000 x 14%) 2800. 00 29. 360. 50 Income before Tax ( 9,360. 50) Vvvvvvvvvvv 3RD YEAR TOTAL SAVINGS 20,000. 00 Less Depreciation Expense 15,936. 00 Working Capital (20,000 x 14%) 2800. 00 18,736. 0 Income before Tax 1,264. 00 Income Tax (1,264. 00 x 35%) 442. 40 NET INCOME 821. 60 VVVVVVVV 4thYEAR TOTAL SAVINGS 20,000. 00 Less Depreciation Expense 9,561. 0 Working Capital (20,000 x 14%) 2800. 00 12,361. 60 Income before Tax 7,638. 40 Income Tax (7638. 40 x 35%) 2,673. 44 NET INCOME 4,964. 96 VVVVVVVV thYEAR TOTAL SAVINGS 20,000. 00 Less Depreciation Expense 9,561. 60 Working Capital (20,000 x 14%) 2800. 00 12,361. 60 Income before Tax 7,638. 40 Income Tax (7638. 40 x 35%) 2,673. 44 4,964. 96 vvvvvvvvv thYEAR TOTAL SAVINGS 20,000. 00 Less Depre ciation Expense 4,780. 80 Working Capital (20,000 x 14%) 2800. 00 7,580. 80 Income before Tax 12,419. 20 Income Tax (12419. 20x 35%) 4,346. 72 NET INCOME 8,072. 48 VvvvvvvvC A S H FLOW _____________________________________ CASH IN CASH OUT 20,000. 00 83,000. 00 20,000. 00 2,300. 00 20,000. 00 3,500. 00 20,000. 00 2,800. 00 20,000. 0 2,800. 00 20,000. 00 442. 40 2,800. 00 2,673. 44 2,800. 00 2,673. 44 2,800. 00 4,346. 2 Totals 120,000. 00 112,936. 00 Vvvvvvvvvv vv vvv vvv NET PRESENT VALUE P 4,500. 00 SINCE MACHINE IS FULLY DEPRECIATED PROFITABILITY INDEX/INTERNAL RATE OF RETURN 1ST YEAR NONE 2ND YEAR NONE 3RD YEAR 821. 60 / 20,000. 00 = 4% 4TH YEAR 4964. 96 / 20,000 = 25% 5TH YEAR 4964. 96 / 20,000 = 25% 6TH YEAR 8072. 48 / 20,000 = 40% Payback period starts on the 3RD YEAR.. Enmar (NICO) P. Matuguinas BSBA_Marketing Management 3rd