A firm purchased $62,800 of fixed assets two years ago. The company no longer needs theseassets so it is going to sell them today for $28,500. The assets are classified as five-yearproperty for MACRS. The MACRS rates are .2, .32, .192, .1152, .1152, .0576, for Years 1 to 6,respectively. What is the net cash flow from this sale if the firm's tax rate is 23 percent and nobonus depreciation is taken?$29,281.04$26,576.00$28.878.12$27,516.60O $29,648.12

Net cash flow from sales is the amount of cash generated or consumed from the sale of goods or…

Answered: A firm purchased $62,800 of fixed…

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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4
What will be the annual cash outflows for Mimi Inc. if it leased a milling machine for $8, 200 per year for 5 years. Assume that the new machine cost $ 42,000 and will depreciate on a straight line basis over the 5 years and that Mimi has a tax rate of 32 percent. Question 15Select one: a. - $5,576 b. $42,000 C. -$8,264 d. $33,800 e. - $2,688
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 $299,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $181,000 and 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.)
A firm depreciated its assets with regard to an investment to $0.00 book value by the end of the project's 10 year life. However, the firm expects to sale the assets for $500,000 in 10 years. What is the PV of the after-tax salvage value if r = 10% per year, and the firm's tax rate is 32%?
A corporation expects to receive $32,000 each year for 15 years from the sale of a product. There will be an initial investment of $150,000. Manufacturing and sales expenses will be $8067 per year. Assume straight line depreciation, a 15-year useful life and no salvage value. Use a 46% income tax rate. What is the before andafter-tax rate of return? No excel Please and thank you
NZ Ltd has decided to install a new item of plant, which will cost $500,000. The following alternative financing arrangements are available: Purchasing finance by borrowing Amount borrowed $500,000 Term of loan 5 years Interest rate 9.7% payable annually Lease plan Amount of finance $500,000 Term 5 years True interest rate 9.1% Annual instalments $128,880 Additional information The tax rate is 28%. Assume that tax benefits arising from deductible expenditures are received in the year of the expenditure. NZ Ltd uses the after-tax borrowing rate as a discount rate. Which financing option should NZ Ltd choose? Show your calculations of the cost of each financing option. Use whole numbers when rounding.
Mf1. Consider an asset that costs $492,800 and is depreciated straight-line to zero over its 6-year tax life. The asset is to be used in a 2-year project; at the end of the project, the asset can be sold for $61,600. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset?
ABC, Inc., is considering purchase of a new equipment. The expected sales are expected to be $5,556,982. The annual cash operating expenses are expected to be $2,957,536. The annual depreciation is estimated to be $456,926 and the interest expense is estimated to be $206,975. If the tax rate is 33%, what is the operating cash flow?
Grove Media plans to acquire production equipment for $845,000 that will be depreciated for tax purposes as follows: year 1, $329,000; year 2, $189,000; and in each of years 3 through 5, $109,000 per year. A 10 percent discount rate is appropriate for this asset, and the company’s tax rate is 20 percent. Required: Compute the present value of the tax shield resulting from depreciation. 2. Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($169,000 per year).
Galleon Industries is building a temporary manufacturing plant which will be completely removed after 5 years. The required initial cash outlays at Time 0 are as follows. Land --- $500,000New building --- 2,000,000Equipment --- 3,000,000 Galleon uses straight-line depreciation for tax purposes and will depreciate the building over 10 years and the equipment over 5 years. Galleon's effective tax rate is 40%. Revenues from the new plant are estimated at $1.5 million annually and cash expenses are estimated at $300,000 annually. At the end of the fifth year, the assumed sales values of the land and building are $700,000 and $800,000, respectively. The equipment will be removed at a cost of $80,000 and sold for $200,000. Galleon's net cash flow for period 5 would be a. $2,612,000.b. $1,040,000.c. $1,200,000d. $2,660,000.
-Suppose a 5-year piece of equipment purchased for 500,000 is sold at the end of year 4 after taking four years of straight- line depreciation. Assume that the equipment is sold for 200,000 and the tax rate is 35%. What is the book value? Is there tax savings on the sale? Is there tax effect?
Justyne needs assistance with the information shown below. The defender can be replaced now or kept for 4 more years. (Notes: All monetary values are in $1000 units. Assume that either asset is salvaged in the future at its original salvage estimate. Since no revenues are estimated, all taxes are negative and considered “savings” to the alternative. Neglect any capital gains or losses.) a. Perform a PW-based replacement study using an after-tax MARR = 12% per year and Te = 35%. Do this using hand calculations.b. Verify your results using a spreadsheet-based replacement study.

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