A machinery that costs $100,000, has a service life of 5 years and a salvage value of $10,000 at the end ofservice life. The Gross Income - Operating Expenses expected to be generated for the use of this machine isestimated to be $50.000 per year for up to 5 years. The Tax rate is 30% and the MARR afer tax is 8% per year.Using Double Declining Balance Method of depreciation, determine:Findthe total taxes paid for the five year period and the Net Present Worth(NPW) of these taxes paid.Find the Cash Flow After Tax(CFAT) and the NPW of this CFAT.(Construct/develop your CFAT table to answers these questions.)

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Description: A machinery that costs $100,000, has a service life of 5 years and a salvage value of $10,000 at the end ofservice life. The Gross Income - Operating Expenses expected to be generated for the use of this machine isestimated to be $50.000 per year fo

Initial Investment $ 1,00,000.00 Salvage Value $ 10,000.00 Tax Rate 30% MARR After…

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A machinery that costs $100,000, has a service life of 5 years and a salvage value of $10,000 at the end of service life. The Gross Income - Operating Expenses expected to be generated for the use of this machine is estimated to be $50,000 per year for up to 5 years. The Tax rate is 30% and the MARR after tax is 8% per year. Using Double Declining Balance Method of depreciation, determine: Findthe total taxes paid for the five year period and the Net Present Worth(NPW) of these taxes paid. Find the Cash Flow After Tax(CFAT) and the NPW of this CFAT. (Construct/develop your CFAT table to answers these questions.)

A machinery that costs $100,000, has a service life of 5 years and a salvage value of $10,000 at the end of service life. The Gross Income - Operating Expenses expected to be generated for the use of this machine is estimated to be $50,000 per year for up to 5 years. The Tax rate is 30% and the MARR after tax is 8% per year. Using Double Declining Balance Method of depreciation, determine: Findthe total taxes paid for the five year period and the Net Present Worth(NPW) of these taxes paid. Find the Cash Flow After Tax(CFAT) and the NPW of this CFAT. (Construct/develop your CFAT table to answers these questions.)

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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Consider an asset that costs $1,156,294 and is depreciated straight-line to zero over its 10-year tax life. The asset is to be used in a 3-year project; at the end of the project, the asset can be sold for $214,463. If the relevant tax rate is 0.24, what is the aftertax cash flow from the sale of this asset (SVNOT)?
Consider an asset that costs $700,000 and is depreciated straight-line to zero over its seven-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $151,000. If the relevant tax rate is 23 percent, what is the aftertax cash flow from the sale of this asset? Aftertax salvage value=
3) A generator was purchased two years ago at a price of P 1,250,000 with a governmental tax of 4% of its price. On that time, installation charges amounts to P120, 000 with a miscellaneous expenses of P 275, 000. It is expected that five years from now, it will depreciates a total value of P 1, 307, 579.97. The generator would last ten more years from now. Depreciation method uses the Matheson Formula. Construct a depreciation table for the said generator.
A firm has invested $60,000 in machinery with a 5-year useful life. The machinery will have no salvage value, as the cost to remove it will equal its scrap value. The uniform annual benefits from the machinery are $15,000. For a combined 45% income tax rate, and 100% bonus depreciation, compute the after-tax rate of return.
Use the spreadsheet to determine the after-tax internal rate of return. For this problem, assumea a 10 year analysis period, straight-line depreciation is used, 21% corporate tax rate , an initial cost of $ 200,000, an annual benefit of $60,000 and no salvage value but instead you must pay a disposal fee of $20,000 that your corporate accountant determined is tax deductible.
A firm purchased $120,000 worth of light general-purpose trucks. The operations of the trucks lead to annual income of $60,000 for years 1~4. These trucks were then sold for $20,000 at the end of year 4. Assume a 30% combined tax rate. With a 40% bonus depreciation plus MACRS depreciation, do the following. (a) Calculate the before-tax IRR. (b) Calculate the after-tax IRR.
This question is based on the following in formation: An investment is Machinery costing P 250,000 with a 4-year life and no salvage value is expected to produce the following net income after taxes of 30%: End of year 1 P 17,000 2 22,000 3 25,000 4 26,000 How much is the annual tax shield?How much is the annual tax shield?A. P 17,580B. P 17,850C. P 18,570D. P 18,750What is the ROI (using the cash income)? A. 6.3%B. 9%C. 31.3%D. 34%
Consider an asset that costs $528,000 and is depreciated straight-line to zero over its 6-year tax life. The asset is to be used in a 3-year project; at the end of the project, the asset can be sold for $66,000. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset? $115,038.00 $104,082.00 $109,560.00 $51,480.00 $429,012.00
As a member of UA Corporation's financial staff, you must estimate the Year 1 cash flow for a proposed project with the following data. Under the new tax law, the equipment used in the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. What is the Year 1 cash flow? Do not round the intermediate calculations and round the final answer to the nearest whole number. Sales revenues, each year $45,500 Other operating costs $22,522 Interest expense $4,000 Tax rate 25.0%
6) A company is considering purchasing a new automated machine that is expected to generate an additional income of $125,000 annually. The equipment will have an initial cost of $187,500 and estimated annual operating and maintenance costs of $50,000. Its estimated salvage value at the end of its useful life of 4 years will be $37,500. The equipment is a MACRS-GDS 3-year property for calculating depreciation deductions. The effective tax rate is 35%. For this new machine, determine the after-tax cash flow for each year of operation. (Round off values to the nearest dollar) ΕΟΥ BTCF a) 0 1 2 3 4 MACRS-GDS Deduction Taxable Income Tax ATCF b) (8 points) If the after-tax MARR is 10% per year compounded annually, compute the PW of the after-tax cash flows. Based on this PW, would you recommend the purchase of this new equipment?
Consider an asset that costs $635,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $105,000. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Aftertax salvage value I.
Consider an asset that costs $1,075, 196 and is depreciated straight-line to zero over its 15-year tax life. The asset is to be used in a 5-year project; at the end of the project, the asset can be sold for $109, 800. If the relevant tax rate is 0.39, what is the aftertax cash flow from the sale of this asset (SVNOT)?

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