Engineering Economy ENGR 3970/ET 5970 Homework Assignment #4 – Fall 2018

1. At the end of a tax year, a company has the following data:
Gross receipts (sales) $300,000
Cost of goods sold $50,000
Tax depreciation $15,000
Book depreciation $8,000
Interest on debt $10,000
What is the company’s tax liability (tax) and effective tax rate?
2. For the net cash flows given below, determine the following
(a) The net present value if MARR equals 20%.
(b) The internal rate of return.
(c) The payback period.
End of Year Net Cash Flow
0 -20,000
1 -20,000
2 -20,000
3 -20,000
4 40,000
5 20,000
6 10,000
7 20,000
8 20,000
9 20,000
10 20,000