An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $4,750,000 and will be sold for $1,375,000 at the end of the project. If the tax rate is 24 percent, what is the aftertax salvage value of the asset? Refer to Table 10.7. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) Aftertax salvage value

An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $4,750,000 and will be sold for $1,375,000 at the end of the project. If the tax rate is 24 percent, what is the aftertax salvage value of the asset? Refer to Table 10.7. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) Aftertax salvage value

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Foley Systems is considering a new project whose data are shown below. Under the new tax law, the equipment for the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. After the project's 3-year life, the equipment would have zero salvage value. The project would require additional net operating working capital (NOWC) that would be recovered at the end of the project's life. Revenues and operating costs are expected to be constant over the project's life. What is the project's NPV? (Hint: Cash flows from operations are constant in Years 1 to 3.) Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC 10.0% Equipment cost $75,000 Required net operating working capital (NOWC) $15,000 Annual sales revenues $73,000 Annual operating costs $25,000 Tax rate 25.0% Question options: $2,549 $18,970 $4,571…
Your facility is undergoing a major expansion, which will require significant capitalinvestment into new machinery. The total cost of the machinery will be $7.2 Million, and theywill be purchased outright immediately. This machinery is considered a 7-year MACRSasset. However, you expect to use it for only six years before selling it for $1.5 Million. How much should the company deduct from their taxable income for depreciation expensesin year 3 for this machinery?a. $1,259,280b. $996,930c. $1,028,571d. $1,200,000
Thomson Media is considering some new equipment whose data are shown below. The equipment has a 3-year tax life. Under the new tax law, the equipment is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. The equipment would have a positive pre-tax salvage value at the end of Year 3, when the project would be closed down. Also, additional net operating working capital (NOWC) would be required, but it would be recovered at the end of the project's life. Revenues and operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC 10.0% Equipment cost $70,000 Required net operating working capital (NOWC) $10,000 Annual sales revenues $61,000 Annual operating costs $30,000 Expected pre-tax salvage value $5,000 Tax rate 25.0% Please explain and provide calculations.
Vishnu
Ef 336.
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 depreciated its assets with regard to an investment to $0.00 book value by the end of the project's 10 year life. However, the firm expects to sale the assets for $500,000 in 10 years. What is the PV of the after-tax salvage value if r = 10% per year, and the firm's tax rate is 32%?
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $5.7 million and will be sold for $1.8 million at the end of the project. If the tax rate is 21 percent, what is the aftertax salvage value of the asset? Refer to the MACRS schedule. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567) Aftertax salvage value
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
Mf1. Consider an asset that costs $492,800 and is depreciated straight-line to zero over its 6-year tax life. The asset is to be used in a 2-year project; at the end of the project, the asset can be sold for $61,600. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset?