a loan principal payment of $200,000, and a loan interest payment of $150,000. Determine the net income of the company in tax year 1(tax rate is 30%).
Chapter 8 / 9/14 Statements & cost of capital
1. classify costs (fixed costs / variable costs)& (period costs & product costs)
2. know how to develop Income Statement
Chapter 3 interest
1. understand nominal interest rates & effective interest rates 2. understand interest periods & payment periods 3. know how to calculate effective interest rates from nominal ones. 4. know how to calculate effective i when numerous interest periods 5. know how to calculate interest payment & principal payment 6. know how to calculate the price of bonds
12.. In computing the equivalent present worth of the following cash flow series at
period zero, which of the following expressions is incorrect? a. P=$100(P/A,i,4)*(P/F,i,4) b. P=$100(F/A,i,4)*(P/F,i,7) c. P=$100(P/A,i,7) -$100(P/A,i,3) d. P=$100(P/F,i,4)+(P/F,i,5)+(P/F,i,6)+(P/F,i,7)
Review Class
REVIEW QUESTIONS
Chapter 1-2
1. 4 fundamental principles in engineering economics 2. understand the term “economic equivalence” 3. remember 8 formulas & their excel command 4. know how to draw the cash flow diagram 5. know how to find P if i ∝ 6. know how to calculate P, F or A using interest tables
Chapter 10 inflation
1. know how to compute CPI / average inflation rate 2. understand “actual dollars” & “ constant dollars” 3. know how to convert from one to another 4. know how to calculate the market interest rate with inflation-free interest rates & inflation rates 5. know how to use constant/actual dollar analysis to compute PW
Chapter 7 Depreciation & Taxes
1. understand “cost basis” 2. know how to book depreciation (3 methods) 3. know how to use “switching policy” to calculate depreciation with different salvage values 4. know how to use MACRS to book depreciation 5. know how to calculate taxes (progressive tax rates/average tax rates) 6. know how to calculate net income /net cash flow
3. Can you find the conventional-payback period according to the infoHale Waihona Puke mation below?N
Cash flows
Cum.flows
0
-$2000,000
-$2000,000
1
$450,000
-$1550,000
2
$680,000
-$870,000
3
$808,000
-$62,000
4
$908,000
$846,000
5
$910,000
$1756,000
6
$908,000
$2664,000
7
$1260,000
$ 3924,000
4.
In Tax year 1, an electronics-packaging firm had a gross income of $35,000,000, $6,000,000 in salaries, $7,000,000 in wages, $800,000 as capital investment in equipment with 7-year MACRS service life.
Chapter 5 AE
1. know how to distinguish capital costs & operation costs 2. know how to calculate capital costs 3. know how to calculate unit price /unit cost 4. know how to compare two projects with different project lives .
Notes:
1. 只准带计算器，不允许带手机 2. 提交大作业：在名录上签字 （组长负责）
Samples
1. In what circumstances does the annual effective interest rate exceed the annual nominal interest rate? a. When the interest period is longer than one year b. When the interest period equals one year c. When the interest period is shorter than one year d. Whenever
3. know how to develop Cash Flow Statement
4. understand the impact of inflation on Cash Flow Statement
5. know how to compute cost of equity/ cost of debt/ cost of capital
Chapter 6 IRR
1. understand “simple investment ” & “non-simple investment ” 2. know how to compute IRR (3 methods) 3. know how to use incremental IRR to compare mutually exclusive projects.
Chapter 4 PW
1. know how to calculate conventional payback period & discounted payback period
2. know how to use payback period to evaluate a project 3. know how to use PW analysis to make evaluation