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1. Four years ago ABB purchased an asset for $300,000 with an estimated salvage of $60,000. Depreciation was $60,000 per year. The following annual gross incomes and expenses were recorded. The asset was sold for $60,000 after 4 years. (a) Tabulate the cash flows by hand after an effective 32% tax rate is applied. Use the format of Table 17–3. (b) Continue the table above and calculate the net income (NI) estimates. Year of ownership Gross income, 1 2 3 4 $ 80,000 - 20,000 150,000 -40,000 120,000 -30,000 100,000 -50,000 Expenses, $

1. Four years ago ABB purchased an asset for $300,000 with an estimated salvage of $60,000. Depreciation was $60,000 per year. The following annual gross incomes and expenses were recorded. The asset was sold for $60,000 after 4 years. (a) Tabulate the cash flows by hand after an effective 32% tax rate is applied. Use the format of Table 17–3. (b) Continue the table above and calculate the net income (NI) estimates. Year of ownership Gross income, 1 2 3 4 $ 80,000 - 20,000 150,000 -40,000 120,000 -30,000 100,000 -50,000 Expenses, $

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Table 17-3 TABLE 17-3 Table Column Headings for Calculation of (a) CFBT and (b) CFAT (a) CFBT table headings Investment P and Salvage Gross Operating Expenses Income Year GI E CFBT (4) = (1) + (2) + (3) (1) (2) (3) (b) CFAT table headings Taxable Gross Income Operating Expenses Investment P and Salvage Depreciation Income Taxes Year GI E D TI (TI)(T,) CFAT (5) = (1) + (2) – (4) (7) = (1) + (2) + (3) – (6) (1) (2) (3) (4) (6)
Transcribed Image Text:Table 17-3 TABLE 17-3 Table Column Headings for Calculation of (a) CFBT and (b) CFAT (a) CFBT table headings Investment P and Salvage Gross Operating Expenses Income Year GI E CFBT (4) = (1) + (2) + (3) (1) (2) (3) (b) CFAT table headings Taxable Gross Income Operating Expenses Investment P and Salvage Depreciation Income Taxes Year GI E D TI (TI)(T,) CFAT (5) = (1) + (2) – (4) (7) = (1) + (2) + (3) – (6) (1) (2) (3) (4) (6)
1. Four years ago ABB purchased an asset for $300,000 with an estimated salvage of $60,000. Depreciation was $60,000 per year. The following annual gross incomes and expenses were recorded. The asset was sold for $60,000 after 4 years. (a) Tabulate the cash flows by hand after an effective 32% tax rate is applied. Use the format of Table 17–3. (b) Continue the table above and calculate the net income (NI) estimates. Year of ownership 1 2 3 4 $ 80,000 - 20,000 150,000 -40,000 100,000 -50,000 Gross income, 120,000 -30,000 Expenses, $
Transcribed Image Text:1. Four years ago ABB purchased an asset for $300,000 with an estimated salvage of $60,000. Depreciation was $60,000 per year. The following annual gross incomes and expenses were recorded. The asset was sold for $60,000 after 4 years. (a) Tabulate the cash flows by hand after an effective 32% tax rate is applied. Use the format of Table 17–3. (b) Continue the table above and calculate the net income (NI) estimates. Year of ownership 1 2 3 4 $ 80,000 - 20,000 150,000 -40,000 100,000 -50,000 Gross income, 120,000 -30,000 Expenses, $
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