Additional flashcards

11 important questions on Additional flashcards

How is gain calculated?

Gain = MV - BV (Example 7.11)

How do you calculate the depreciation recapture?

Depreciation recapture = MVend - BVend

Given the interest rate and the amount of tax paid, how do you calculate the market interest rate?

Im = i(1-t)
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Consider Annual expenses of 1400 with an increase of 8% per year and a MARR with 25% how do you calculate the AW?

Zie A4.

How do you calculate the after tax income?

ATCF = BTCF + taxation

How do you calculate the taxable income?

Taxable income = BTCF - depreciation
- exclude tax flows for buying and selling assets
- include capital gains and losses

What do you do with taxes on property and insurance and income taxes?

Include taxes on property and insurances in the cashflow and after that calculate the amount of income tax paid.

What does the BC ratio address?

The ratio of benefits against disbenefits (monetary) can be used to select a project.

When the variance is large what does this mean?

There is large risk involved because of a higher amount of diverse and unknown factors.

When dealing with an assumed normal distribution, statistically independent variables and linear combinations how do you calculate the variance, mean and the probability of the PW

E(PW) = sum Ck * E(Fk )
V(PW) = sum (Ck ) 2 * E(Fk )
ck = coefficient
Fk = periodic net cash flow 

Z = (PW - E(PW) / SD(PW)
then look up in the table.

Example 12.5

What are the 2 formulas used in monte carlo simulations?
- normally distributed
- uniform distribution random event

Outcome value = mean + [random normal deviate * standard deviation]
 
simulation outcome = A + (RN/RNm) (B-A)

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