A machine generates $500,000 of gross income during its tax year and incurs operating expenses of $25,000. aditional expences on business assets amount $20,000 and insurances amount $75,000. The total depreciation deductions equal $80,000. if the tax rate is 10 percent from the total texable income of this machine, find the pesent worth of this machine if it is basic cost is 500,000 ? use i=5%.N=10 years. O a. $1,584,859 O b. $2,202,585 Oc $2,202,356 O d. $2,202,595 e $2,202,754

A machine generates $500,000 of gross income during its tax year and incurs operating expenses of $25,000. aditional expences on business assets amount $20,000 and insurances amount $75,000. The total depreciation deductions equal $80,000. if the tax rate is 10 percent from the total texable income of this machine, find the pesent worth of this machine if it is basic cost is 500,000 ? use i=5%.N=10 years. O a. $1,584,859 O b. $2,202,585 Oc $2,202,356 O d. $2,202,595 e $2,202,754

Name: A machine generates $500,000 of gross income during its tax year and
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: A machine generates $500,000 of gross income during its tax year and incurs operating expenses of $25,000. aditional expences onbusiness assets amount $20,000 and insurances amount $75,000. The total depreciation deductions equal $80,000. if the tax

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

See similar textbooks

Similar questions

A machine costs $100,000 and generates $25,000 of pre-tax operating income per year. The tax rate is 40%. The machine is in a CCA class with a 20% rate. The cost of capital is 12%. The machine is expected to last 10 years and will have no salvage value. Other assets will remain in the asset class. What is the NPV of the machine?
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?
A specially coated mold for manufacturing tires (MACRS-GDS 3-year property) costs $35,000 and has a salvage value of $1,750 after a useful life of 5 years. The mold generates a net savings of $14,000 per year. The corporate tax rate is 25%. Find the after-tax cash flow for each year using MACRS-GDS allowances.
A company with $795,000 in operating assets is considering the purchase of a machine that costs $85,000 and which is expected to reduce operating costs by $17,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Cholce 5 years 9.4 years 0.2 years 46.8 years
Please show all the steps and reasonings
Jack bought a rice milling equipment amounting to 3,145,000.00, and is expected to generate 546,500.00 of annual cash revenues and 96,500.00 of annual cash expenses. At the end of 10-year life of the equipment, the disposal value is 47,000. Ignoring income taxes, what is the payback period?
A company is considering purchasing a new piece of machinery at a cost $60,000. It is expected to generate revenues of $20,000 per year for 4 years against $3,000 of annual operating expenses. The machinery is MACRS 3-year property. The income tax rate is 25%. MARR is 10%. What is the EVA for year 3?
What is the per-year depreciation amount if straight-line depreciation is used? Suppose a business purchases a machine for $10,000. The useful life is estimated to be 5 years, and the income tax rate is 25%. In the first year, the company makes $5,000 worth of sales using the machine, and operational expenses were $1,500.
An industrial laser can be purchased and installed for $90,000$. Assume that the GDS recovery rate is given for the 7-year period. We expect that the laser stays in service for eight years, and we gain $10,000$ from the disposal of it at the end of year eight. The $11,038$ net annual value that can be attributed to this laser is constant over all the eight years. Assume that the effective income tax rate is $0.25$ and the after-tax MARR equals $15%$ per year. What is the ATCF at the end of year six? Consider the depreciation deduction based on the 7-year period GDS recovery rate.
1
$500,000 was invested in depreciable property to obtain before-tax annual revenues of $108,333.33 each of the following 9 years and $158,333.33 the 10 year. Now suppose the expenditure is on a consulting study that identifies cost-saving opportunities that will produce the same BTCF. With a 25% income-tax rate and an after-tax MARR of 10%, what will be the after-tax measures of economic worth for the investment?
A firm has invested $50,000 in equipment with a 5-year useful life. The machinery will have a salvage value of $5,000. The annual benefits from the machinery are $13,000 for the first year and increase by $2,000 per year. Assume a combined 30% income tax rate, and the firm uses the SOYD depreciation. Calculate the before-tax IRR. Calculate the after-tax IRR.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS