Earthworks is an excavation company which started its operations in the year 2015. Theboard of governors set the Minimum acceptable rate of return for the company at 16% after-tax. Dueto the nature of their work, Earthworks own equipment which are in CCA class 8 (CCA rate = 20%).For the 5 years following its inception, Earthworks purchased 4 Machines, two of which they endedup selling. The record of their transactions is as summarized below:TransactionPurchase of Machine ADollar Value of transactionTax Year2015$99,0002017Purchase of Machine B$189,0002017Sale of Machine A$78,3002018Purchase of Machine C$128,0002018Sale of Machine B$159,2002019Purchase of Machine D$163,0002019Sale of Machine C$99,100What is the remaining Undepreciated Capital cost at the end of year 2018?b) What is the equivalent annual worth of the tax savings associated with these transactions if thecorporate tax rate is 24%?

a) Remaining Undepreciated Capital Cost (UCC) at the End of 2018Initial Purchase and CCA…

Answered: Earthworks is an excavation company…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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John constructed a commercial building amounting to $1.59 Million. Permits and taxes charges amounted to 3.23% of the construction cost. It is expected to have a life of 50 years with a salvage value of 12.9% of the construction cost. Determine the depreciation charge during the 5th year using MACRS Method and the worth of the building after 22 years using Sinking Fund Method at money worth 8%. Show cash flow diagram and complete solution.
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ENGINEERING ECONOMY
8. An equipment cost P 56,000. Its resale value at the end of the 5th year is P 15,000,00. Using Declining Balance Method, determine the depreciation charge for the 2nd year. Ans. P.9,977.86
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