Certain new machinery used in manufacturing of motor vehicles, when placed in service, is estimated to cost $275,000. It is expected to reduce net annual operating expensesby $50,000 per year for 10 years and to have a $40,000 MV at the end of the 10th year. Assume that the firm is in the federal taxable income bracket of $335,000 to$10,000,000 and that the state income tax rate of 7.5%. State income taxes are deductible from federal taxable income. This machinery is to be depreciated using the MACRS(GDS). Develop the BTCFS and ATCFS and compute for the respective PWs at EOY O using an MARR of 12%.Before-Tax Cash Flow{xx.xx} ($)Cash Flow for Income Taxes After-Tax Cash Flow {xx.xx}{xx.xx} ($)ΕΟΥDepreciation {xx.xx} ($)Taxable Income (xx.xx} ($)($)101[ Select ]( Select)3145| Select)16| Select )18101 SelectPW(0) usingMARR

Present Worth is defined as the method that is used to calculate future cashflows Cost of New…

Answered: Certain new machinery used in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Your company has purchased new equipment for $100,000. An additional $20,000 has been charged for shipping and handling. The equipment has a useful life of 10 years and a salvage value of $10,000. Using the straight-line method, what is the depreciation amount during the second year? $9,000 $10,000 $11,000 None of the above
A firm can purchase a centrifugal separator (5-year MACRS property) for $22,000. The estimated salvage value is $4,000 after a useful life of six years. Operating and maintenance (O&M) costs for the first year are expected to be $2,200. These O&M costs are projected to increase by $1,000 per year each year thereafter. The income tax rate is 24% and the MARR is 11% after taxes. What must the uniform annual benefits be for the purchase of the centrifugal separator to be economical on an after-tax basis?
Hw.112.
A proposed cost-saving device has an installed cost of $570,000. It is in Class 8 (CCA rate = 20%) for CCA purposes. It will actually function for five years, at which time it will have no value. There are no working capital consequences from the investment, and the tax rate is 35%. a. What must the pre-tax cost savings be for us to favour the investment? We require an 11% return. (Hint: This one is a variation on the problem of setting a bid price.) (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Cost savings $122332.17 b. Suppose the device will be worth $81,000 in salvage (before taxes). How does this change your answer? (Do not round your Intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Cost savings 170855.86
617 8. A machine has a first cost of P200,000 with a scrap value of P25,000 at the end of Its economic life of 10 years. Find its book value after 8 years using the Double Declining Balance Method. 出

None
Denny Kean owns a very profitable ice cream stand. Based on the results of a $6,600 marketing research project, Denny is now considering adding a line of frozen yogurt to his product mix. Denny expects that the machine necessary to produce the yogurt will cost $130,000, last for five years and have a salvage value of $10,000 at the end of the fifth year. For tax purposes, Denny will depreciate the yogurt machine over the five years to a zero salvage value using the straight-line method. Denny will incur extra annual fixed costs of $1,500 per year if he acquires this machine, while his variable costs (the cone/cup, yogurt, wrapping paper, spoons, etc.) will be $0.50 per serving. He expects to sell 100 servings a day (365 days in a year) at a price per serving to be determined. The annual rent on his stand under the existing noncancelable lease (with ten years remaining) is $18,000 per year, with built-in annual increases to cover inflation (expected to be 3% annually). The relevant…
An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $60,000, and it has an estimated MV of $12,000 at the end of an estimated useful life of 14 years. Compute the depreciation amount in the third year and the BV at the end of the sixth year of life by each of these methods: a. The SL method. b. The 200% DB method with switchover to SL. c. The GDS. d. The ADS.
A concrete and rock crusher for demolition work has been purchased for $50,000, and it has an estimated SV of $12,000 at the end of its five year life Engineers have estimated that the following units of production (in m³ of crushed material) will be contracted over the next five years. Using the units of production depreciation method, what is the depreciation allowance in year three, and what is the BV at the end of year two? The depreciation allowance in year three is $ The BV at the end of year two is $. (Round to the nearest dollar) (Round to the nearest dollar) EOY m³ 1 14,000 2 26,000 3 35,000 4 17,000 5 8,000
17.7 Rotana Construction, Inc., has operated for the last 21 years in a northern U.S. state where the state income tax on corporate revenue is 6% per year. Rotana pays an average federal tax of 23% and reports taxable income of $7 million. Because of pressing labor cost increases, liability insurance premium increases, and other cost increases, the president wants to move to another state to reduce the total tax burden. The new state may have to be willing to offer tax allowances or an interest-free grant for the first couple of years in order to attract the company. You are an engineer with the company and are asked to do the following. (a) Determine the effective tax rate for Rotana. (b) Estimate the state tax rate that would be necessary to reduce the overall effective tax rate by 10% per year. (c) Determine what the new state would have to do financially for Rotana to move there and to reduce its effective tax rate to 22% per year.
On May 1,2018, Karina purchased 100 shares of Gold stock at a total cost of $2,000, She received a total of $150 in dividends and sold the stock for $2,280 on May 15, 2019. Karina has a combined state and federal marginal tax rate of 28%. Her tax rate on both long-term capital gains and dividend income is 15%. What is her after-tax holding period return on her investment in Gold stock? 21.50% 23.48% 18.28% 16.28%
4. ABY company purchased a new CNC machine for $100,000. The market value of the new machine in each year is given in the table below. Annual operating and maintenance costs will be $30.000 per year. MARR is 12% per year. a) Calculate the marginal cost of the new CNC machine in years I to 4. b) Determine the economic life of new CNC machine.

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