A company purchased a piece of equipment for $175,000 and sells it after 3 years. The equipment is depreciated by the MACRS method using a five-year period. The annual maintenance cost of the equipment is $3,000. If the equipment is sold at end of 3 years for a value of $100,000, what will be the taxes that has to be paid from the sale of the equipment? Assume that the tax rate is 35%. O $6790 $11480 $8136 No taxis to be paid
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- A company purchased a piece of equipment for $155,000 and sells it after 3 years. The equipment is depreciated by the MACRS method using a five-year period. The annual maintenance cost of the equipment is $2,900. If the equipment is sold at end of 3 years for a value of $30,000, what will be the taxes that has to be paid from the sale of the equipment? Assume that the tax rate is 35%. O $6790 O $7980 $8136 O No taxis to be paidMcPherson Company must purchase a new milling machine. The purchase price is $50,000, including installation. The machine has a tax life of 5 years, and it can be depreciated according to the following rates. The firm expects to operate the machine for 4 years and then to sell it for $12,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4? Depreciation Rate Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 a. $10,900 b. $9,837 c. $8,878 d. $9,345 e. $10,335 0.20 0.32 0.19 0.12 0.11 0.06Churchill Ltd. purchases an asset for $150,000. This asset qualifies as a five-year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1 = 20.00%; year 2 = 32.00%; year 3 = 19.20%; year 4 = 11.52%. Churchill has a tax rate of 30%. If the asset is sold at the end of four years for $40,000, what is the cash flow from disposal?
- Fink Co. is interested in purchasing a new business vehicle. The vehicle costs $48,000 and will generate delivery revenue of $23,000 for each of the next 6 years. At the end of the 6 years, the vehicle will have a salvage value of $4,800. The tax rate is 21%. Assuming that the vehicle is depreciated using MACRS 5-year property class, and that Fink Co. uses an after-tax MARR of 7%, compute the PW and determine whether Fink Co. should purchase the new business vehicle. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property. $ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±10. Should Fink Co. purchase the new business vehicle? YesEconomics A company purchased a piece of equipment for $155,000 and sells it after 3 years. The equipment is depreciated by the MACRS method using a five-year period. The annual maintenance cost of the equipment is $2,900. If the equipment is sold at end of 3 years for a value of $30,000, what will be the taxes that has to be paid from the sale of the equipment? Assume that the tax rate is 35%. O $6790 O $7980 O $8136 O No taxis to be paid ASAP PLEASEEaster Corporation will replace one of its assets with an updated model. The current asset was purchased two years ago at a cost of $70,000. It has been depreciated under MACRS using a five-year recovery period. The company can sell this existing asset for $30,000. The new asset is going to cost $80,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on both ordinary income and capital gains, the initial investment will be equal to what amount after adjusting for taxes?
- ← Your company has purchased equipment (for $50.000) that will redoce materials and labor costs by $12,000 each year for N years. After N years, there will be no further need for the machine, and because the machine is specially designed, it will have no MV at any time. The RS, however, has ruled that you must depreciate the equipment on a SL basis with a tax life of five years. If the effective income tax rate is 35%, what is the minimum number of years your fem must operate the equipment to earn 10% per year after taxes on its investment? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year Your firm must operate the equipment for minimum years to earn 10% per year after taxes on its investment (Round your answer up to the nearest whole number)The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $303,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $185,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. a. What is the book value of the equipment? The book value of the equipment after the third year is $ (Round to the nearest dollar.) b. If Jones sells the equipment today for $185,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? The total after-tax proceeds from the sale will be $ (Round to the nearest dollar.)The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $299,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $181,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. a. What is the book value of the equipment? The book value of the equipment after the third year is $ (Round to the nearest dollar.)
- A local delivery company has purchased a delivery truck for $15,000. The truck will be depreciated under MACRS is five-year property. The truck's market va lue (or selling price) is expected to be $2,500 less each year. The O&M costs are expected to be $3.000 per year. The firm is in a 40% tax bracket. and its MARR is 15%. Compute the annual-equivalent cost for retaining the truck for a two-year period, which will be(a) $5,527 (b) $5.J75 (c) $5,362 (cl) $5,014A company purchases an industrial laser for $123,000. The device has a useful life of 4 years and a salvage value (market value) at the end of those four years of $50,000. The before-tax cash flow is estimated to be $95,000 per year. a. You, of course, suggested applying the 3-year MACRS (GDS) method instead of the straight-line method. Given an effective tax rate of 26%, determine the depreciation schedule and the after tax cash flow. b. Based on the MACRS depreciation schedule for this asset, if the industrial laser was sold for $75,000 in year two (consider year two to be the "year 2" row in the table in Part (a), what will be the amount of gain (depreciation recapture) or loss on the disposal of the asset at the end of this year? how do you solve for part a for ATCF in year 4. how do you solve part b. Thank youComey Products has decided to acquire some new equipment having a $240,000 purchase price. The equipment will last 4 years and is in the MACRS 3-year class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.) The firm can borrow at a 5% rate and pays a 25% federal-plus-state tax rate. Comey is considering leasing the property but wishes to know the cost of borrowing that it should use when comparing purchasing to leasing and has hired you to answer this question. What is the correct answer to Comey's question? (Hint: Use the shortcut method to find the after-tax cost of the loan payments.) Do not round intermediate calculations. Round your answer to the nearest dollar.