1) 1) An asset for petroleum refining was purchased for $720,000, and placed in service by an oil company with the trade in of an old unit with value $10,000. The new asset has an estimated MV (market value) of $150,000 at the end of an estimated useful life of 18 years. It is expected that this asset will bring net annual profit of $90,000. The depreciation is based on the 200% DB method with switchover to SL method. Assuming the Federal corporate income tax rate is 21% and Indiana state's corporate income tax rate is 5.25%. With the switchover method, What is the present worth of the company's after tax return. Please fill in year 3's value in the table below. Hint: you will need to calculate year 1 and 2's value first. BTCF Depreciation ATCF Year Beginning year BVDepreciation DB Depreciation SL Selected 1 3 4
1) 1) An asset for petroleum refining was purchased for $720,000, and placed in service by an oil company with the trade in of an old unit with value $10,000. The new asset has an estimated MV (market value) of $150,000 at the end of an estimated useful life of 18 years. It is expected that this asset will bring net annual profit of $90,000. The depreciation is based on the 200% DB method with switchover to SL method. Assuming the Federal corporate income tax rate is 21% and Indiana state's corporate income tax rate is 5.25%. With the switchover method, What is the present worth of the company's after tax return. Please fill in year 3's value in the table below. Hint: you will need to calculate year 1 and 2's value first. BTCF Depreciation ATCF Year Beginning year BVDepreciation DB Depreciation SL Selected 1 3 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
solve the question given in the image provided.
![1) 1) An asset for petroleum refining was purchased for $720,000, and placed in service by an oil
company with the trade in of an old unit with value $10,000. The new asset has an estimated MV
(market value) of $150,000 at the end of an estimated useful life of 18 years. It is expected that
this asset will bring net annual profit of $90,000. The depreciation is based on the 200% DB
method with switchover to SL method. Assuming the Federal corporate income tax rate is 21%
and Indiana state's corporate income tax rate is 5.25%. With the switchover method, What is
the present worth of the company's after tax return. Please fill in year 3's value in the table
below.
Hint:
you
will need to calculate year 1 and 2's value first.
BTCF
Depreciation ATCF
Year
Beginning year BVDepreciation DB Depreciation SL Selected
1
B
E
F
4
2.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb1725bdf-8b27-478f-b8eb-a32bdb4263e1%2F0c8ebd5b-6e67-4c76-9527-c9d11d3e6191%2Ff9bubn9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:1) 1) An asset for petroleum refining was purchased for $720,000, and placed in service by an oil
company with the trade in of an old unit with value $10,000. The new asset has an estimated MV
(market value) of $150,000 at the end of an estimated useful life of 18 years. It is expected that
this asset will bring net annual profit of $90,000. The depreciation is based on the 200% DB
method with switchover to SL method. Assuming the Federal corporate income tax rate is 21%
and Indiana state's corporate income tax rate is 5.25%. With the switchover method, What is
the present worth of the company's after tax return. Please fill in year 3's value in the table
below.
Hint:
you
will need to calculate year 1 and 2's value first.
BTCF
Depreciation ATCF
Year
Beginning year BVDepreciation DB Depreciation SL Selected
1
B
E
F
4
2.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education