A local delivery company has purchased a delivery truck for $15,000. The truck will be depreciated under MACRS is five-year property. The truck's market va lue (or selling price) is expected to be $2,500 less each year. The O&M costs are expected to be $3.000 per year. The firm is in a 40% tax bracket. and its MARR is 15%. Compute the annual-equivalent cost for retaining the truck for a two-year period, which will be(a) $5,527 (b) $5.J75 (c) $5,362 (cl) $5,014

Q: A company is considering purchasing a new piece of machinery at a cost $50,000. It is expected to…

A: Economic Value Added Economic value added is referred to as the economic profit which is calculated…

Q: The Wet Corporation has an investment project that will reduce expenses by $30,000 per year for 3…

A: Depreciation year 1= Depreciation rate * Project cost= 0.3333 * 35,000= 11665.50

Q: Montcalm Company is evaluating the purchase of a new machine that costs $435,000, will have a CCA…

A: To calculate the tax shield, we need to first determine the tax depreciation allowance and the tax…

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $24…

A: Given: Cost of equipment = $24 million Depreciated = 100% Tax rate = 30% Sale value = $7 million

Q: A corporation expects to receive $32,000 each year for 15 years from the sale of a product. There…

A: Rate of return is the annual income in percentage earned from an investment.

Q: An company uses a technology which it purchased for $15 million. Operating costs are $2 million per…

A: IRR stands for internal rate of return and refers to a method that is used for analyzing the…

Q: Kurt's Coffees has a new hot drink in mind that is expected to generate sales of 24,000 units over…

A: Excel Spreadsheet:

Q: A company is deciding whether to lease or buy new equipment. The equipment can be purchased for…

A: The PV CCATS (Present Value of Capital Cost Allowance Tax Shield) can be calculated as follows:…

Q: NUBD Co. purchase a machine for P180,000, which will be depreciated on the straight-line basis over…

A: Initial Investment = 180,000 Useful life = N = 5 SLM Depreciation Depreciation expense = Initial…

Q: The owner of a bicycle repair shop forecasts revenues of $228,000 a year. Variable costs will be…

A: Income Statement: A financial statement that shows the profitability of the business in the given…

Q: A flatbed truck is to be purchased by HaulCo for $70,000. The truck is a Class 16 asset. HaulCo's…

A: Capital cost allowance (CCA) is one of the methods of charging depreciation expense. This method is…

Q: A company needs to decide whether to buy or lease new equipment. The equipment can be purchased for…

A: Lease payment means those payments which are paid for the purpose of taking an asset on lease. These…

Q: A project costs $800,000 plus $200,000 in shipping and installation. For the next five years the…

A: NPV is the concept of capital budgeting in which cost and benefit analysis of a project is done…

Q: Elder, Inc. is considering the purchase of a new air-handling system that will have no effect on…

A: Savings means the amount which a firm earns by installing a new plant or project. The project which…

Q: Laurel's Lawn Care Limited has a new mower line that can generate revenues of $120,000 per year.…

A: Revenue = $120,000Direct production costs = $40,000Fixed costs = $15,000Tax rate = 25%Factory cost =…

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $24…

A: Book value of asset = 0 million (100% depreciated)  Equipment sold at = 10 million Tax rate = 20%

Q: Fort requires equipment costing $320,000.  It is a  9-year project, and is depreciated straight line…

A: cost of equipment= $320,000 life span of the project= 9 years  Sales generated= $189,000  cost=…

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $21…

A: Equipment originally cost =21,000,000 Depreciation (100%*21,000,000)  =21,000,000 Book value…

Q: Californian Wave Inc. is now at the end of the final year of a project. The equipment originally…

A: Given information, Original cost =P17,500 Depreciated=65% Tax rate =25% Selling price =P6,000

Q: Laurel's Lawn Care Limited has a new mower line that can generate revenues of $135,000 per year.…

A: Operating cash flow is the amount received by the business by performing their core business…

Q: Spectacular Flooring (SF) is a wood flooring wholesale company. SF is considering building a new…

A: Please find the answer to the above question below:

Q: An asset with 5-year MACRS life will be purchased for $12,000. It will produce net annual benefits…

A: Rate of return refers to the income from the investment annually expressed in a form of a…

Q: fter tax annual cost

A: Cash flow represents the money in and out of the company. It refers to the financial statement that…

Q: The owner of a bicycle repair shop forecasts revenues of $168,000 a year. Variable costs will be…

A: The income statement is one of the financial statements that record the company’s income, expenses,…

Q: You must evaluate a proposal to buy a new milling machine. The purchase price of the milling…

A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…

Q: Laurel’s Lawn Care Limited has a new mower line that can generate revenues of $132,000 per year.…

A: Operating Cash Flow (OCF) is a measure of the cash generated or used by a company's operations…

Q: Laurel’s Lawn Care Limited has a new mower line that can generate revenues of $120,000 per year.…

A: In the given case, we have provided the revenues , direct cost, fixed cost . Depreciation is…

Q: If a chemical olant is paying 43% in income taxes and wants to purchase a ball mill designed to last…

A: Particulars Amount ($) Annual income 24,000 Less: Annual expenditure (13,000) Less:…

Q: The Wet Corporation has an investment project that will reduce expenses by $20,000 per year for 3…

A: Depreciation year 1= Depreciation rate * Project cost= 0.3333 * 25000= 8332.50

Q: A project requires the purchase of machinery for $40.000 The machinery belongs in a 20% CCA class…

A: NPV is the value added by a project and can be found in the difference between the present value of…

Q: aurel's Lawn Care Ltd., has a new mower line that can generate revenues of $174,000 per year. Direct…

A:

Q: A corporation expects to receive $32,000 each year for 15 years from the sale of a product. There…

A: Purpose of every investment is to get return. Return means extra amount received over the invested…

Q: The market value of the property that you own is $15 million. The gross annual rental income for…

A: Set up cost=$7000000Economic life=10yearsRevenue=$5000000 (low demand)Revenue=$9000000(Medium…

Q: A company is considering purchasing a new piece of machinery at a cost $60,000. It is expected to…

A: Economic Value Added = Net Operating Profit After Tax - ( Cost of Capital * Invested Capital)

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $28…

A: Non current assets are those assets which are being used by the business for more than one year.…

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $27…

A: Non current assets are those assets which are being used by the business for more than one year.…

Q: Mid-America Shipping is considering purchasing a new barge for use on its Ohio River routes. The new…

A: Minimum Acceptable rate of return is the minimum rate which the management wishes to have from any…

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.