3) Below table shows the calculations for an after-tax analysis of a machine purchase alternative. EOY ВТСЕ Depreciation Тахаble Income ATCF Deduction Income Таxes - 20,000 - 20,000 9,500 9,500 9,500 1 16,000 - 6,500 3,000 3,000 3,000 16,000 16,000 16,000 16,000 18,000 13,000 13,000 13,000 13,000 13,000 15,000 2 -6,500 -6,500 - 6,500 -6,500 - 7,500 3 4 3,000 3,000 9,500 9,500 10,500 5 6 3,000 a) Find answers to the below questions i. What are the cost basis (price) and "annual revenues less expenses"? What is the terminal market value (or salvage value)? ii. iii. What is the income tax rate? iv. What is the method used for depreciation deduction? What is the book value at the end of useful life? v. b) Calculate the equivalent present worth (PW) and the equivalent annual worth (AW) at an after-tax MARR of 9%.
3) Below table shows the calculations for an after-tax analysis of a machine purchase alternative. EOY ВТСЕ Depreciation Тахаble Income ATCF Deduction Income Таxes - 20,000 - 20,000 9,500 9,500 9,500 1 16,000 - 6,500 3,000 3,000 3,000 16,000 16,000 16,000 16,000 18,000 13,000 13,000 13,000 13,000 13,000 15,000 2 -6,500 -6,500 - 6,500 -6,500 - 7,500 3 4 3,000 3,000 9,500 9,500 10,500 5 6 3,000 a) Find answers to the below questions i. What are the cost basis (price) and "annual revenues less expenses"? What is the terminal market value (or salvage value)? ii. iii. What is the income tax rate? iv. What is the method used for depreciation deduction? What is the book value at the end of useful life? v. b) Calculate the equivalent present worth (PW) and the equivalent annual worth (AW) at an after-tax MARR of 9%.
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
Problem 1PS
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Transcribed Image Text:3)
Below table shows the calculations for an after-tax analysis of a machine purchase alternative.
Depreciation
Income
Тахes
EOY
ВТСР
Тахable
АТCF
Deduction
Income
20,000
16,000
16,000
16,000
- 20,000
9,500
9,500
9,500
- 6,500
- 6,500
- 6,500
- 6,500
– 6,500
-7,500
1
3,000
3,000
3,000
13,000
13,000
13,000
13,000
2
16,000
16,000
9,500
9,500
4
3,000
3,000
5
13,000
6
18,000
3,000
15,000
10,500
a) Find answers to the below questions
i.
What are the cost basis (price) and "annual revenues less expenses"?
What is the terminal market value (or salvage value)?
What is the income tax rate?
ii.
iii.
iv.
What is the method used for depreciation deduction?
What is the book value at the end of useful life?
V.
b) Calculate the equivalent present worth (PW) and the equivalent annual worth (AW) at an
after-tax MARR of 9%.
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