NPV Cash flow help

[arslanshakir]

Hi guys I am a student and I am facing a problem in preparing cash flow table with reducing balance method I am sending you the detail please tell me what I have to do with this and if possible then please provide me depreciation calculation.

Cost of Equipment 45,800
The estimated service life of the equipment is six year. The salvage values at the end of life is zero, using the reducing balancemethod at 30% per annum.
note:
Under the current rental agreement, there is an option to extend the lease at the endof Year 5 for another 10 years at a higher rental payment of $12,000 per year and payment in advance.

please solve this as soon as possible I will be very thankful to you.

 

[Deleted member 4993]

Hi guys I am a student and I am facing a problem in preparing cash flow table with reducing balance method I am sending you the detail please tell me what I have to do with this and if possible then please provide me depreciation calculation.

Cost of Equipment 45,800
The estimated service life of the equipment is six year. The salvage values at the end of life is zero, using the reducing balancemethod at 30% per annum.
note:
Under the current rental agreement, there is an option to extend the lease at the endof Year 5 for another 10 years at a higher rental payment of $12,000 per year and payment in advance.

please solve this as soon as possible I will be very thankful to you.

What are your thoughts?

Please share your work with us ...even if you know it is wrong.

If you are stuck at the beginning tell us and we'll start with the definitions.

You need to read the rules of this forum. Please read the post titled "Read before Posting" at the following URL:

http://www.freemathhelp.com/forum/announcement.php?f=33

 

[arslanshakir]

reply

What are your thoughts?

Please share your work with us ...even if you know it is wrong.

If you are stuck at the beginning tell us and we'll start with the definitions.

You need to read the rules of this forum. Please read the post titled "Read before Posting" at the following URL:

http://www.freemathhelp.com/forum/announcement.php?f=33

I have attached the depreciation schedule please check and solve my issue.
and for Rent i have calculated in that way like 12000 (1-Tax)= 12000 (1-.3)= 8400 and payment is in advance but i am confused that we have to increase the lease with 12000 extra rent for another 10 year or not ? because asset life is 6 year and previous lease is going to expire after five year so only one year will remain

 

[arslanshakir]

WHAT is your question?
Problem makes no sense...please repost in proper English...

Hi,
ok the question is that
1- there is no change in rent (payment in advance) still five year left on ten year lease.

2- Under the current rental agreement, there is an option to extend the lease at the end of Year 5 for another 10 years at a higher rental payment of $12,000 per year and payment in advance.

3- Cost of Equipment 45,800 the estimated life of the equipment is 6 year. The salvage values at the end of life is zero, use the reducing balance method at 30% per annum.

4- Tax rate is 30%.

This is the complete information now please tell me how to calculate depreciation by using reducing balance method and what amount of rent I need to add in 6 year cash flow table ( I already attached my working in previous reply) ?