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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Question
Chapter 10, Question 1
Transcribed Image Text:Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $87,000. It is classified in the property class category of a single-purpose
agricultural and horticultural structure. Then the company sold the tree trimmer after four years of service. If a seven-year life and MACRS, E, was used for the
depreciation schedule, what is the after-tax cash flow from the sale of the trimmer (use a 40% tax rate) if
a. the sales price was $30,000?
b. the sales price was $27,178.80?
c. the sales price was $22,000?
i Data Table
a. If the sales price is $30,000, what is the after-tax cash flow?
(Round to the nearest cent.)
MACRS Fixed Annual Expense Percentages by Recovery Class
Click on this icon e to download the data from this table
Year
3-Year
5-Year
7-Year
10-Year
1
33.33%
20.00%
14.29%
10.00%
2
44.45%
32.00%
24.49%
18.00%
14.81%
19.20%
17.49%
14.40%
4
7.41%
11.52%
12.49%
11.52%
11.52%
8.93%
9.22%
6.
5.76%
8.93%
7.37%
7
8.93%
6.55%
8.
4.45%
6.55%
6.55%
10
6.55%
11
3.28%
Enter vour apswer in the answer box and then click Check Answ
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