A consulting company is buying a new computer system for their headquarters for $175,000. Theasset has a life of 5 years, and it will be put to service on April 1st 2022. Develop a full depreciationtable for this asset according to MACRS (i.e., calculate the deductions allowed for 2022, 2023, 2024,2025, 2026 and 2027). What is the book value of this asset if it is sold on Sept 1st 2026 and what arethe tax implications if it was sold for $30,000. The company is in a 23% tax bracket.

New Computer Cost = $175,000 Asset Life = 5 Years

Answered: A consulting company is buying a new…

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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1.Maiden Corp is considering the purchase of a new CNC machine tool for use in their research lab. The machine they are thinking about costs $750,000 and has an expected life of five years. Please calculate their depreciation schedule using MACRS. What is the present worth of the depreciation?
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