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: Daily Enterprises is purchasing a $10.5 million machine. It will cost $55,000 to transport and…

A: Free cash flows are cash flows that are available for investors after firm have met all operating…

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: Your firm needs a computerized machine tool lathe which costs $80,000, will generate $50,000…

A: Step 1: analyze first the problem.. Step 2: depreciation methods are. Straight line method, double…

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: A high-pressure reactor vessel in a pharmaceutical company was purchased for $200,000. It has a…

A: After-tax cash flow of the vessel is the net proceeds from the sale of vessel. Net proceeds means,…

Q: Brummit Corporation, is evaluating a new 4 year project. The equipment necessary for the project…

A: The projected residual value of an asset at the end of its useful life is referred to as salvage…

Q: Your firm needs a computerized machine tool lathe which costs $44,000 and requires $11,400 in…

A: The after-tax salvage value of the lathe is calculated as follows:MACRS Depreciation:Year 1:…

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: Your firm needs a machine which costs $220,000, and requires $37,000 in maintenance

A: MACRS (Modified Accelerated Cost Recovery System) is a system used to calculate tax deduction of…

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 is considering the purchase of a new machine for $50,000, installed. The machine has a tax…

A: For evaluating any new asset or project, cashflows are considered. For overall evaluation cashflows…

Q: Umbrella Corp., has a WACC of 10.2% and a tax rate of 26%.  Project Alice requires an upfron cost of…

A: NPV is the present value of cash flows during the term of the project

Q: Precision Ltd is considering an equipment that costs $176,000, and is depreciated on a straight-line…

A: Depreciation refers to the measure which allocates the cost of an asset over some specified useful…

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

A: It is a case that deals with the capital cost allowance tax shield (CCATS). It is the tax advantage…

Q: The following is governed by an income tax rate of 25% . Depreciation rate is determined using MACRS…

A: Correct option is 1.

Q: Johnny Dear Inc. is examining the possibility of purchasing harvesting machinery for $147,500 that…

A: Under the capital budgeting technique, different projects are evaluated on the basis of different…

Q: ucky Cement wants to evaluate an acquisition of an equipment worth Rs 300,000. Its marginal tax rate…

A: In this we need to calculate the present value of buying and present value of leasing both are…

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: Michelle Amabo Company is planning to buy a new machine that can produce additional 20,000 units  of…

A: Annual net cash inflows from the new machine=Net Income+Depreciation Expense

Q: The Scampini Supplies Company recently purchased a newdelivery truck. The new truck costs $22,500,…

A: The formula to compute NPV for an abandonment option as follows:

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: pany has purchased a machine at the cost of $35,000. The machine is expected to provide annual…

A: NPV is net present value and is most used capital budgeting method being used and based on the time…

Q: what is the after tax salvage value?

A: Information Provided: Initial costs = $190,000 Maintenance costs = $34,000 Life = 3 years…

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: 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: Talia’s Tutus bought a new sewing machine for $45,000 that will be depreciated over 5 years using…

A: Depreciation charge is a method used to allocate the cost of a tangible asset, like machinery or…

Q: A new machine can be purchased for $1,500,000. It will cost $45,000 to ship and $55,000 to install…

A: Given Cost of machine = $1500000 cost to ship = $45000

Q: Floopy Co has decided to purchase new equipment. They are in the 38% tax bracket.  The desired…

A: ParticularsAmountEquipment cost      77,000Interest12%Tax rate38%Loan payments…

Q: Your firm needs a computerized machine tool lathe which costs $52,000 and requires $12,200 in…

A: By utilizing a depreciation tax shield, it is possible to decrease taxable income. This shield…

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: Acompany is evaluating the addition of equipment to its presentoperations. They need to purchase…

A: Formulas:

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: The possibility of acquiring new machinery at a cost of $ 40,000 is being evaluated, which may be…

A: Solution-Straight line depreciation is the most basic method of depreciation. It includes equal…

Q: Acompany is evaluating the addition of equipment to its presentoperations. They need to purchase…

A: Consider the life of equipment under a special class with life 3 Years. And WACC be 10% For…

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: Land Development Corporation is considering the purchase of a bulldozer. The bulldozer will cost…

A: Please note that we have solved the first question. Please submit the other questions separately.…

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.