IU purchased a super computer for $15,000. This computer qualifies for 5-year recovery under MACRS. Use the Table provided in lectures. IU has a tax rate of 20%. Assume that the super computer is sold for $4,000 at the end of year 4. What is the after- tax salvage value? O $2,765.21 O $1,877.00 $3,718.40 $2,765.34
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- A cutting edge metallic 3D printer is purchased by Helix Corp for $160000. It is expected to last 9 years and have a salvage value of $9500. It is considered a MACRS 7 year property. It will produce $84000 in net revenue each year during its life. Corporate income taxes are 0.30 and the after-tax MARR is 0.08. What is the PW of the CFAT for year 2? Your Answer: AnswerA company has purchased a machine (CCA rate 24%) at $300,000 and has a tax rate of 33.00%. By how much will the NPV change if the company is able to obtain a $13,000 salvage value for its machine at the end of the project's life in Year 4? Assume a discount rate of 11.20% and that all else remains the same. Question 10Answer a. $8,502 b. $10,415 c. -$1,913 d. $6,589 e. $10,075A company purchases an industrial laser for $140000. The device has a usetul e of 4 years and a salvage value (market value) at the end of those four years of S50.000. The beforetax cash fow is estimated to be $90,000 per You, of course, suggested applying the 3year MACRS (GDS) method instead of the straight ine method Given an effective tax rate of 24%. determine the depreciation schedule and the ater tax cash fow b. Based on the MAČRS depreciation schedule for this asset E the industrial laser was sold for S90.000 in year two (consider year bwo to be the "year 2" row in the table in Pan (a), what wilbe the amount of gain (depreciation recapture) or loss on the disposal of the asset at the end of this year? ye Cick the lcon to view the GOS Recovery Rates () for the 3year property class a. Determine the MACRS depreciation amounts and the ater tax cash flow for this laser. Fl in the table below (Round to the nearest dollar) Depreciation, S AICFS -140.000 EOY
- You have just bought a new pusher dozer for your equipmentfleet. Its cost is $100,000. It has an estimated servicelife of four years. Its salvage value is $12,000.a. Calculate the depreciation for the first and second yearusing the straight-line and DDB methods.b. The IIT components of ownership cost based on averageannual value are:Tax: 2%Insurance: 2%Interest: 7%What cost per hour of operation would you charge tocover IIT?A solid waste disposal company borrowed money at 10% per year interest to purchase new haulers and other equipment needed at the company-owned landfill site. If the company got the loan 2 years ago and paid it off with a single payment of $4,600,000, what was the principal amount P of the loan? O a. $3806153 O b. $3810653 O. $3816035 O d. $38016531-Suppose you own restaurant. You buy a new pizza oven for $110,000. The oven can be sold for $30,000 after seven years. What is the third year's depreciation charge that you can deduct from your income using: 'Straight-line depreciation? DDB depreciation? MACRS depreciation assuming 5-year property class (use the MACRS table available on blackboard)
- The cost of the machine is $14, 475. The CCA rate is 29% After 9 years, the machine is sold for $719 which is less than the UCC of the asset class. If there are other assets in the asset class, the discount rate is 7% and the tax rate is 39%, what is the present value of the CCA tax shield of this machine? (Assume 150%-rule). "Keep at least 4 decimal places for all calculations. Do not enter your answers in percentage. All answers are in decimal.*.The ABC Company uses the after-tax MARR of 10% per year, and effective tax rate (T.) of 50%. A new machine has the following estimates: New Machine First cost ($) Annual operating cost ($/year) -15,000 -3,000 Salvage value ($) Life (years) 3,000 10 The machine is retained in use for 10 years, and then sold for the estimated salvage value. a. Complete the table below to find the cash flow after-tax (CFAT) in each year using the straight-line (SL) depreciation method over the 10-year life. b. Estimate the after-tax net present worth (NPW) using a MARR of 10% per year. Depreciation Taxable ($) Year Gross Initial CFBT Тахes CFAT ($) Expenses ($) Income Investment or ($) Income ($) ($) Salvage ($) -15,000 ($) - 0. - - 1 to 10 -3,000 -1500 - - 3,000 - 10 -A company has purchased a machine (CCA rate 27 %) at $232,000 and has a tax rate of 38.00%. By how much will the NPV change if the company is able to obtain a $15,000 salvage value for its machine at the end of the project's life in Year 4? Assume a discount rate of 10.10% and that all else remains the same. a. $13,031 b. $10,208 c. - $2,823 d. $7,385 e. $10,852
- You bought equipment for $110,000 3 years ago. Today you have an offer to sell your equipment for $65,000. What is the Depreciation Expense, Book Value and After-Tax Cashflow from salvage Value when using: (a) 5-Year MACRSEsc You consider purchasing a new piece of equipment (7yr MACRS property) for your manufacturing process for $120,000. The equipment has a 6-year useful life and no salvage value. The equipment is expected to generate an additional $40,000 of net income before taxes and depreciation each year by using this upgraded system. The combined federal and state income tax rate= 35%. Annual inflation = 4%. a. Fill in the following table assuming MACRS depreciation rates Year 46°F Rain showers 0 1 F1 2 O 2 3 4 5 Pretax income 6 MACRS Taxable Depreciation income F2 - F3 + F4 Ⓡ b. If your MARR = 12%, should you purchase this system based on your real after-tax income? Why or why not? F5 8 C B Tax owed F6 Q Search G After tax income F7 Ca 7 F8 O Inflation adjustment factor O F9 ala LG F10 Real after tax income 0 A I THE F11 - 0 1 asod F12 + Prt Sc ScrLk Post-it sod Ins Post-it Del Backspace Post-it PgUp Home asod> Post-it Mumi 1-10 PgOn End Pause Break 11-15 11-15 C2. 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 $302,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $184,000and 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 $184,000 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.)