A tank-barge contract is worth 2.02 million once GB550's Unit 8 project cash flow analysis builds incremental flows, MACRS depreciation and taxed salvage, then runs four risk tests. Searches like "gb 550 unit 8 assignment example", "gb550 unit 8 sample" and "gb550 unit 8 example" land here.
What a finished GB550 Unit 8 project cash flow analysis looks like
A cash flow table and three risk exhibits fill about six pages. The barges cost 50.4 million, 2.10 million each, and the project ties up 2.2 million of working capital. Contract revenue of 15.6 million a year less 7.3 million of cash operating costs is taxed at 24 percent after ten-year MACRS depreciation, which starts at 5.04 million and shields 1.21 million of tax in year one. Operating cash flow runs from 7.52 million in year one to 8.49 in year two and 7.10 by year eight. At the end, barges with a book value of 8.26 million sell for an assumed 27.0 million, netting 22.50 after tax on the gain. Discounted at 9.02 percent, the Unit 6 rate plus a premium for one-customer risk, the project is worth 2.02 million, with an internal return of 9.87 percent.
How a GB550 Unit 8 example is structured
Cash flows are built from their parts, and each part appears where a grader can test it. An assumptions list comes first, separating what the contract fixes, rate and volume, from what the firm estimates, costs, resale value and working capital. A relevance paragraph removes two items: a hull design study already paid for and a share of head-office overhead the project does not change. The depreciation schedule follows year by year, then operating cash flow computed as after-tax operating profit plus depreciation. Terminal flows sit on their own rows, working capital recovered and salvage taxed on its gain over book value. A section on the discount rate explains the premium over the firm-wide figure. Risk is tested three ways: break-even revenue, scenarios for non-renewal and low-water years, and a probability-weighted value. The condition attached to approval is stated last.
Two costs left out
A 350,000-dollar hull design study already spent and allocated head-office costs are excluded, each with one sentence on why the decision cannot change them.
Depreciation as a tax shield
Ten-year MACRS rates are applied to 50.4 million, and the schedule shows depreciation mattering only through the tax it saves, 1.21 million in year one.
Salvage taxed on the gain
A 27.0 million sale against an 8.26 million book value creates a 4.50 million tax bill, so the terminal inflow is 22.50 million plus recovered working capital.
A rate above the firm's
Adding three-quarters of a point to 8.27 percent reflects dependence on one petrochemical customer, and the paper shows value at both rates, 3.90 and 2.02 million.
Three tests of thin value
Revenue can fall only 3.1 percent before value disappears; losing the renewal gives minus 1.02 million, and weighting four scenarios leaves 0.47 million.
Where marks go in GB550 Unit 8
Accounting profit discounted in place of cash flow undoes this analysis from its first row, since depreciation is a deduction for tax and not a payment. Sunk study costs and allocated overhead left in the table are the relevance errors graders mark most often. Working capital that goes in at the start and never comes back understates value; salvage entered at its sale price with no tax on the gain overstates it. A discount rate borrowed unchanged for a project carrying one customer's risk draws comment in a fair number of sections. Risk analysis limited to a single sensitivity line misses what the unit usually asks for, some sense of how likely the bad cases are. Conclusions that call a 2.02 million value safe, without noting how little revenue must slip to erase it, overstate the case.
Get a GB550 Unit 8 example written to your instructions
Attach the Unit 8 case figures, including costs, revenue estimates, depreciation method and any working capital figures, plus the prompt and rubric. Cash flows get built year by year with relevance decisions explained, terminal items shown separately and the risk tests your section asks for. The opening custom sample costs nothing and normally returns in 24-48h.
GB550 Unit 8 questions, answered
Why does the salvage value get taxed?
Because the barges would sell for more than their depreciated book value, and that gain is taxable. MACRS writes the assets down faster than they lose market value, so a sale after eight years recaptures some of the earlier deductions. The sample taxes the 18.74 million gain at 24 percent, which is why a 27.0 million sale nets 22.50 million.
Is adding a premium to the discount rate standard?
It is one accepted approach when a project is riskier than the firm's average, and many textbooks describe it. The alternative is to keep the firm's rate and model the risk directly in the cash flows through scenarios. The sample does both, showing value at 8.27 and 9.02 percent and weighting four scenarios, letting a grader compare the two methods directly.
Where do the scenario probabilities come from?
In the sample they are stated assumptions, each with a sentence on its basis: how often recent years brought low water, and how often similar contracts were renewed. Real cases sometimes supply probabilities; otherwise the paper must state and defend its own. Graders mainly look for assumptions that are visible and reasonable rather than precise, since nobody knows these figures exactly.