A special tool for the manufacture of finished plastic products (MACRS-GDS 3 year property) costs $116,000 and has a planned salvage value of $17,000 after a useful life of 4 years. The tool generates a net savings of $34,000 per year. The total effective corporate tax rate is 27 percent. After three years, plans changed and the company sold the machine at the end of the year for $25,000. A partial view of the analysis is shown below. What is D, the CFAT of year 2? Year CFAT PW of CFAT $ (116,000) CFBT Depr. TI Тах 0 $(116,000) $ 34,000 $ 38,663 $ (4,663) $ (1,259) $ 35,259 2 $ 34,000 $ 51,562 $(17,562) $ (4,742) 3 $ 59,000 1 F D G A в E H Where CFBT = Cash Flow Before Tax; Depr Depreciation; TI = Taxable Income; Tax = Tax; CFAT = Cash Flow After Tax; PWofCFAT = Present Worth of Cash Flow After Tax. %3D Your Answer: Answer

A special tool for the manufacture of finished plastic products (MACRS-GDS 3 year property) costs $116,000 and has a planned salvage value of $17,000 after a useful life of 4 years. The tool generates a net savings of $34,000 per year. The total effective corporate tax rate is 27 percent. After three years, plans changed and the company sold the machine at the end of the year for $25,000. A partial view of the analysis is shown below. What is D, the CFAT of year 2? Year CFAT PW of CFAT $ (116,000) CFBT Depr. TI Тах 0 $(116,000) $ 34,000 $ 38,663 $ (4,663) $ (1,259) $ 35,259 2 $ 34,000 $ 51,562 $(17,562) $ (4,742) 3 $ 59,000 1 F D G A в E H Where CFBT = Cash Flow Before Tax; Depr Depreciation; TI = Taxable Income; Tax = Tax; CFAT = Cash Flow After Tax; PWofCFAT = Present Worth of Cash Flow After Tax. %3D Your Answer: Answer

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 4PROB

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