Calculate the tax consequences for the following assets sales. The assets all belong to a CCA class with a 20% rate and the company has a cost of capital of 10% and a marginal tax rate of 30%. Unless told otherwise assume there are still assets in the class after the sale. a. An asset with an original cost of $10,000 is sold for $6,000. The UCC balance before the sale is $12,000.

Calculate the tax consequences for the following assets sales. The assets all belong to a CCA class with a 20% rate and the company has a cost of capital of 10% and a marginal tax rate of 30%. Unless told otherwise assume there are still assets in the class after the sale. a. An asset with an original cost of $10,000 is sold for $6,000. The UCC balance before the sale is $12,000.

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

See similar textbooks

Similar questions

3) ( Below table shows the calculations for an after-tax analysis of a machine purchase alternative. EOY ВТСР Depreciation Deduction Тахable Income АТCF Income Таxes - 20,000 16,000 16,000 16,000 16,000 16,000 18,000 3,000 3,000 3,000 3,000 3,000 3,000 13,000 13,000 13,000 13,000 13,000 15,000 - 6,500 - 6,500 - 6,500 - 6,500 - 6,500 - 7,500 - 20,000 9,500 9,500 9,500 9,500 9,500 1 3 4 6. 10,500 a) Find answers to the below questions What are the cost basis (price) and "annual revenues less expenses"? What is the terminal market value (or salvage value)? What is the income tax rate? i. ii. iii. iv. What is the method used for depreciation deduction? What is the book value at the end of useful life? V. b) Calculate the equivalent present worth (PW) and the equivalent annual worth (AW) at an after-tax MARR of 11%.
Which of the following is true? (a) Tax rates are based on two flat-rate schedules, one for individuals and one for businesses. (b) When businesses subtract expenses, they always include capital costs. (c) For businesses, taxable income is total income less depreciation and ordinary expenses. (d) When quantifying depreciation allowance, one must always divide first cost by MACRS 3-year life.
Firm E must choose between two business opportunities. Opportunity 1 will generate an $11,200 deductible loss in year 0, $7,000 taxable income in year 1, and $28,000 taxable income in year 2. Opportunity 2 will generate $8,000 taxable income in year 0 and $7,000 taxable income in years 1 and 2. The income and loss reflect before-tax cash inflow and outflow. Firm E uses a 5 percent discount rate and has a 40 percent marginal tax rate over the three-year period. Use Appendix A and Appendix B. Required: a1. Complete the tables below to calculate NPV. a2. Which opportunity should Firm E choose? b1. Complete the tables below to calculate NPV. Assume Firm E's marginal tax rate over the three-year period is 15 percent. b2. Which opportunity should Firm E choose? c1. Complete the tables below to calculate NPV. Assume Firm E's marginal tax rate is 40 percent in year 0 but only 15 percent in years 1 and 2. c2. Which opportunity should Firm E choose? Complete this question by entering your…
KNB sold real property to Firm P for $15,000 cash and Firm P’s assumption of the$85,000 mortgage on the property.Required: What is KNB’s amount realized on the sale?b. Compute KNB’s after-tax cash flow from the sale if its adjusted basis in the realproperty is $40,000 and its marginal tax rate is 35 percent.
a piece of machinery cost $500.tax depreciation to date has amounted to $200 and depreciation charged in the financial statements to date is $100 the rate of tax is 30% ? what is the deferred tax liability in relation to this asset?
During 2021, Raines Umbrella Corporation had sales of $760,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $550,000, $90,000, and $95,000, respectively. In addition, the company had an interest expense of $94,000 and a tax rate of 21 percent. (Ignore any tax loss carryforward provisions and assume that interest is fully deductible.) a. What is the company's net income for 2021? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.) b. What is its operating cash flow? (Do not round intermediate calculations.)
13) year MACRS approach. However, after 3 years your company sold the machinery for $50,000. Compute the after-tax gains or losses your company makes on this sale. Assume a tax rate of 21%. Your company bought a piece of machinery for $80,000, and depreciated it using a 7-
Property, in the form of unimproved land, is purchased at a cost of $8000 and is held for 6 years, at which time it is sold for $32,600. Each during the six years of ownership $220 is paid in property tax and may be accounted for at an interest of 12%. The income tax rate on the longterm capital gain is 15% of the gain. Inflation during the period is 4% per year. What is the annual rate of return for this investment?
Assume that The Bell Company operates in an industry for which NOL carryback is allowed. The Bell Company had the following operating results: Year Income (loss) Tax rate Income tax 2018 40,000 25 % 10,000 2019 40,000 25 % 10,000 2020 50,000 30 % 15,000 2021 (130,000 ) 30 % 0 What is the Deferred tax Asset in 2021?
Troy Industries purchased a new machine 3 year(s) ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the schedule.. Assume 21% ordinary and capital gains tax rates. What is the book value of the machine? b. Calculate the firm's tax liability for each case if it sold the machine for each of the following amounts: $ 100,000, 56,000 , 23,200 and $ 15,000
Comparable Sale A was recently sold for $736,291. Assume the PGI of the property is $162,064 and its effective gross income is $80,239. The operating expense ratio of the property is 83%. What is the effective gross income multiplier of Sale A?
Company L sold an inventory item to Firm M for $40,000. Company L’s marginal taxrate is 21 percent. In each of the following cases.Required: Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $10,000 cash and its note for $30,000. The note is payable two yearsfrom the date of sale. Company L’s basis in the inventory item was $15,700.b. Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $5,000 cash and its note for $35,000. The note is payable two yearsfrom the date of sale. Company L’s basis in the inventory item was $47,000.c. Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $40,000 cash. Company L’s basis in the inventory item was $18,000.d. Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $40,000 cash. Company L’s basis in the inventory item was $44,000

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS