Company purchases a new punch press at a cost of $265,000. Delivery and installation cost $46,000. The machine has a useful life of 12-years, but will be depreciated using MACRS over a seven year property class. 1. What is the cost basis of the machine? 2. What will be the depreciation allowance each year over the seven years? 3. If we sell the machine at the end of 5-years for $70,000, what will be the gains/loss tax assuming a 40% tax rate? 4. What are the net-proceeds from the sale?
Company purchases a new punch press at a cost of $265,000. Delivery and installation cost $46,000. The machine has a useful life of 12-years, but will be depreciated using MACRS over a seven year property class. 1. What is the cost basis of the machine? 2. What will be the depreciation allowance each year over the seven years? 3. If we sell the machine at the end of 5-years for $70,000, what will be the gains/loss tax assuming a 40% tax rate? 4. What are the net-proceeds from the sale?
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Can you please show me how to do these parts on excel? I have included the solutions to the parts, but I need to see how it is done with the formulas/equations on Excel, so I can fully understand what is going on. Thank you in advance!
Transcribed Image Text:Company purchases a new punch press at a cost of $265,000. Delivery and installation cost $46,000. The
machine has a useful life of 12-years, but will be depreciated using MACRS over a seven year property class.
1. What is the cost basis of the machine?
2. What will be the depreciation allowance each year over the seven years?
3. If we sell the machine at the end of 5-years for $70,000, what will be the gains/loss tax assuming a 40% tax
rate?
4. What are the net-proceeds from the sale?
Class
10
15
20
Year Depreciation Rate
200%
200%
200%
200%
150%
150%
1. $265,000 + $46,000 = $311,000
33.33
20.00
14.29
10.00
5.00
3.750
44.45
32.00
24.49
18.00
9.50
7.219
3.
14.81
19.20
17.49
14.40
8.55
6.677
1
14.29% $44,442 $266,558
7.41
I1.52
12.49
11.52
7.70
6.177
24.49% $76,164 $190,394
17.49% $54,394 $136,000
12.49% $38,844 $97,156
8.93% $27,772 $69,384 0.04465
2.
11.52
8.93
9.22
6.93
5.713
3
5.76
8.92
7.37
6.23
5.285
4
8,93
6.55
5.90
4,888
$13,886 $83,269.85
4.46
6.55
5.90
4.522
4.462
8.92% $27,741 $41,643
6.56
5.91
8.93% $27,772 $13,871
4.46% $13,871
10
6.55
5.90
4.461
3.28
8
$0
5.91
4.462
12
$227,730
$83,270
$70,000
($13,270)
($5,308)
5.90
4.461
Total Depreciation
13
5.91
4.462
Book Value
14
5.90
4.461
Salvage
15
5.91
4.462
Net Loss
16
2.95
4.461
Тax
17
4.462
18
4.461
Net Proceeds
$75,308
19
4.462
20
4.461
21
2.231
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