Consider an asset that costs $635,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $105,000. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Aftertax salvage value

Consider an asset that costs $635,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $105,000. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Aftertax salvage value

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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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%?
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
A corporation expects to receive $32,000 each year for 15 years from the sale of a product. There will be an initial investment of $150,000. Manufacturing and sales expenses will be $8067 per year. Assume straight line depreciation, a 15-year useful life and no salvage value. Use a 46% income tax rate. What is the before andafter-tax rate of return? No excel Please and thank you
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?
A project requires an increase of $2100 in Net Working Capital at the beginning of the project, which will be fully recovered after the completion of the project. Equipment with a book value of $11,000 will be sold at the end of the project for a salvage value of $6,000. The tax rate is 20%. What is the incremental free cash flow in the year following the end of the project? Question 3Answer a. $9100 b. $7100 c. $4900 d. $2900
A two-year project has sales of $582,960, cash costs of $411,015, and depreciation expense of $68,109. The tax rate is 24 percent and the discount rate is 12 percent. What is the amount of the annual depreciation tax shield? O $23,606.67 O $16,346.16 O $47,213.34 O $26,210.01 A Moving to another question will save this response. Question 12 of 30
A project that provides annual cash flows of $11322 for eight years costs $80145 today. At what discount rate would you be indifferent between accepting the project and rejecting it? (Enter your answer as a percentage, omit the "%" sign in your response, and round your answer to 2 decimal places. For example, 0.12345 or 12.345% should be entered as 12.35.)
Consider an asset that costs $1,075, 196 and is depreciated straight-line to zero over its 15-year tax life. The asset is to be used in a 5-year project; at the end of the project, the asset can be sold for $109, 800. If the relevant tax rate is 0.39, what is the aftertax cash flow from the sale of this asset (SVNOT)?
Full details solution with explanation.
12
Assume that you calculated the ATER after year 3 as $275,000, the after-tax cash flow in year 4 was $6,800 and grew by 3% until year 8, and the ATER in year 8 was $300,000. Use this information to calculate the incremental IRR for not selling the property and collecting rents for years 4-8. What is the incremental IRR for not selling the property? A. 2.88% B. 4.29% C.-41.90% D. 6.40%

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