A special purpose machine toolset costs $20,000. The toolset will be financed through a bank loan of $10,000 repayable in two equal annual payments at 10% compounded annually. The toolset is expected to provide annual savings of $30,000 for two years and is to be depreciated by a 3-year MACRS method. This special purpose toolset will require annual O&M maintenance of $5000 per year. The salvage value at the end of two years is expected to be $8,000. Assuming a marginal tax rate of 25% and a MARR of 15% find the following: a) Find yearly depreciation, any annual interest payments, the taxable income for each year, and then calculate the yearly taxes. b) Identify any gain or loss from the salvage of the asset at the end of the 2nd year; calculate any additional taxes or credits for the 2nd year.
A special purpose machine toolset costs $20,000. The toolset will be financed through a bank loan of $10,000 repayable in two equal annual payments at 10% compounded annually. The toolset is expected to provide annual savings of $30,000 for two years and is to be
a) Find yearly depreciation, any annual interest payments, the taxable income for each year, and then calculate the yearly taxes.
b) Identify any gain or loss from the salvage of the asset at the end of the 2nd year; calculate any additional taxes or credits for the 2nd year.
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