Dog Corporation recorded $175,000 in depreciation expenses in the current year. What will be the amount of its tax shield if its tax rate is 30%?
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- The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be 1.5 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Berndts federal-plus-state tax rate is 40%. Berndt has no debt. a. Set up an income statement. What is Berndts expected net income? Its expected net cash flow? b. Suppose Congress changed the tax laws so that Berndts depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow? c. Now suppose that Congress changed the tax laws such that, instead of doubling Berndts depreciation, it was reduced by 50%. How would profit and net cash flow be affected? d. If this were your company, would you prefer Congress to cause your depreciation expense to be doubled or halved? Why?A firm invests $10.70 million in a new stamping machine. It depreciates straight-line for tax purposes over 5 years. The tax rate is 21%, inflation is 2% a year, and the discount rate is 8%. What is the PV of the depreciation tax shield?You have a depreciation expense of $478,000 and a tax rate of 35%. What is your depreciation tax shield? The depreciation tax shield will be $ (Round to the nearest dollar.)
- Mojave Corporation was looking at an investment that would generate $5,000 in net income before taxes. The company's tax rate is 21%, and there would be $2,000 a year in depreciation on the assets. What is the after-tax cash flow of this investment? $4,370 $5,950 $3,050 $3,950 O None of the aboveThe XYZ Company is considering a new project that will have an annual depreciation expense of $3.7 million. If XYZ's corporate tax rate is 13 %, then what is the value of the depreciation tax shield on their new project?K You have a depreciation expense of $546,000 and a tax rate of 22%. What is your depreciation tax shield? The depreciation tax shield will be $ (Round to the nearest dollar.)
- attachedSuppose you sell a fixed asset for $115,000 when it's book value is $135,000. If your company's marginal tax rate is 21%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?Suppose a firm's tax rate is 25%. a. What effect would a $9.05 million operating expense have on this year's earnings? What effect would it have on next year's earnings? b. What effect would a $10.2 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $2.04 million per year for five years? What effect would it have on next year's earnings? a. What effect would a $9.05 million operating expense have on this year's earnings? What effect would it have on next year's earnings? (Select all the choices that apply.) A. A $9.05 million operating expense would be immediately expensed, increasing operating expenses by $9.05 million. This would lead to a reduction in taxes of 25% x $9.05 million = $2.26 million. B. A $9.05 million operating expense would be immediately expensed, increasing operating expenses by $9.05 million. This would lead to an increase in taxes of 25% × $9.05 million = $2.26 million. C. Earnings would decline by $9.05…
- Adidas bought a $36.4 million piece of equipment. It will be depreciated by $6.07 million per year over 6 years, starting this year (i.e., the same year they purchased it). Suppose Adidas' tax rate is 35%. a. What impact will the cost of the purchase have on earnings for each of the next 6 years? b. What impact will the cost of the purchase have on the firm's cash flow for the next 6 years? Question content area bottom Part 1 a. The impact on earnings will be $enter your response here million each year for 6 years. (Round to two decimal places. Use a negative sign for a decrease in value.) b1. The impact on the firm's cash flow in Year 1 is $enter your response here million. (Round to two decimal places. Use a negative sign for a decrease in value.) b2. The impact on the firm's cash flow in years 2 through 6 is $enter your response here million. (Round to two decimal places. Use a negative sign for a decrease in value.)Suppose you sell a fixed asset for $312,000 when its book value is $102,000. If your company’s marginal tax rate is 35 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?The Berndt Corporation expects to have sales of $12 million. Costs other thandepreciation are expected to be 75% of sales, and depreciation is expected tobe $1.5 million. All sales revenues will be collected in cash, and costs otherthan depreciation must be paid for during the year. Berndt’s federal-plusstate tax rate is 40%. Berndt has no debt.a. Set up an income statement. What is Berndt’s expected net income? Itsexpected net cash flow?