Daily Enterprises is purchasing a $10.2 million machine. It will cost $51,000 to transport and installthe machine. The machine has a depreciable life of 5 years and will have no salvage value. Themachine will generate incremental revenues of $3.8 million per year along with incremental costs of$1.1 million per year. If Daily's marginal tax rate is 21%, what are the incremental earnings (netincome) associated with the new machine?The annual incremental earnings are $(Round to the nearest dollar.)

Step 1: The calculation of the annual incremental earning AB1Incremental revenue $ 3,800,000.00…

Answered: Daily Enterprises is purchasing a $10.2…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A consumer electronics company was formedto develop cell phones that run on or are rechargedby fuel cells. The company purchased a warehouseand converted it into a manufacturing plant for$6,000,000. It completed installation of assemblyequipment worth $1,500,000 on December 31st. Theplant began operation on January 1st. The companyhad a gross income of $8,500,000 for the calendaryear. Manufacturing costs and all operating expenses,excluding the capital expenditures, were $2,280,000.The depreciation expenses for capital expendituresamounted to $456,000.(a) Compute the taxable income of this company.(b) How much will the company pay in federalincome taxes for the year?
Consider a project to supply Detroit with 27,000 tons of machine screws annually for automobile production. You will need an initial $4,600,000 investment in threading equipment to get the project started; the project will last for 5 years. The accounting department estimates that annual fixed costs will be $1,100,000 and that variable costs should be $205 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the 5-year project life. It also estimates a salvage value of $475,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $308 per ton. The engineering department estimates you will need an initial net working capital investment of $440,000. You require a return of 12 percent and face a tax rate of 23 percent on this project. a. Suppose you’re confident about your own projections, but you’re a little unsure about Detroit’s actual machine screw…
Mansukh
A large company is planning to purchase equipment costing $220,000 and will depreciate it fully using straight-line depreciation over 8 years. The company expects that the investment will have an annual benefit of $54,000. Each use of the equipment will also provide a benefit of $25. In 5 years, there will be no salvage value for the equipment. The company's combined marginal tax rate is 24%. Based on 12% after-tax MARR, how many uses of the equipment must the company have each year in order to justify its investment? Question 8 Part A: Choose the correct Before Tax Cash Flow Diagram for this scenario from the following choices. Option A 0 1 220,000 Option C 0 1 G=25 54000 i = 12% 8 i = 12% 54000 +25X Option B G=25X 54000 0 1 220,000 Option D 0 1 8 i = 12% 54000+25X i = 12%
None

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