Easter Corporation will replace one of its assets with an updated model. The current asset was purchased two years ago at a cost of $70,000.  It has been depreciated under MACRS using a five-year recovery period. The company can sell this existing asset for $30,000. The new asset is going to cost $80,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on both ordinary income and capital gains, the initial investment will be equal to what amount after adjusting for taxes?

Q: The Golden Corporation is considering selling one of its old assembly machines. The machine,…

A:

Q: Perfect Accruals Inc., purchased an asset five years ago for a cost of $950,000. The asset has a CCA…

A: The Undepreciated Capital Cost (UCC) is a concept in accounting and tax depreciation that represents…

Q: Consider the case of Scorecard Corporation: Scorecard Corporation is considering the purchase of…

A: Given: Purchase price $11,250 Years 4 Loan $11,250 Interest rate 3.60% Annual maintenance…

Q: 14) Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally…

A: Depreciation can be defined as decrease in the book value of an asset each year.

Q: Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost…

A: Equipment's after tax net salvage value = salvage value - tax on capital gain tax on capital gain =…

Q: Engro Incorporation wants to evaluate an acquisition of an equipment worth $200,000. Its marginal…

A:

Q: St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a…

A: Net Present Value - It is the difference between the present value of cash outflow and present value…

Q: 0 0 $589,811 $612,784 $635,811

A:

Q: The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece…

A: Book value of the asset refers to the value of asset after depreciation for the year.

Q: The used equipment can be sold today for $4.6 million, and its tax rate is 25%. What is the…

A: After Tax Salvage Value: It is computed by reducing the tax on profit on the sale of equipment from…

Q: Your company has purchased equipment (for $50.000) that will reduce materials and labor costs by…

A: Breakeven period The breakeven period for any investment is the period required to make the initial…

Q: St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a…

A: Concept.  Net present value is calculated by deducting initial investment from present value of cash…

Q: This project will require an investment of $20,000 in new equipment. Under the new tax law, the…

A: Given information: Initial investment : $20,000 Tax rate : 25% WACC (cost of capital) : 11% Under…

Q: Brummit Corporation, is evaluating a new 4 year project. The equipment necessary for the project…

A: The projected residual value of an asset at the end of its useful life is referred to as salvage…

Q: A company is evaluating a new 4-year project. The equipment necessary for the project will cos…

A: Aftertax salvage value refers to the amount of tax to be deducted from the sale price after the life…

Q: Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost…

A: After-tax salvage value refers to the amount of equipment after the completion of its useful life…

Q: St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a…

A: PV is the Capital Budgeting technique used to evaluate the profitability and feasibility of the…

Q: Dave's Demolitions Inc. is considering purchasing $697,400 of equipment for a four- year project.…

A: Salvage Value net of tax refers to the sale value of the he equipment or the project after the…

Q: A flatbed truck is to be purchased by HaulCo for $70,000. The truck is a Class 16 asset. HaulCo's…

A: Capital cost allowance (CCA) is one of the methods of charging depreciation expense. This method is…

Q: David's company is considering the acquisition of machine which belongs to a class with CCA rate of…

A: A person or company may decrease the amount of income that is subject to taxation by using a tax…

Q: Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost…

A: Salvage value refers to the residual value, that is, the value at which the equipment can be traded…

Q: XYZ Company plans to invest $1 million in a new plant which is expected to produce a uniform annual…

A: Net Present Value: It is the difference  between the current worth of money inflows  and outflows…

Q: Precision Ltd is considering an equipment that costs $176,000, and is depreciated on a straight-line…

A: Depreciation refers to the measure which allocates the cost of an asset over some specified useful…

Q: A company purchases an industrial laser for ​$123,000. The device has a useful life of 4 years and a…

A: After tax cash flow can be determined by deducting depreciation and taxes from the operating cash…

Q: Consider a profitable company with an asset that cost $3 million that is depreciated straight line…

A: The net proceeds collected after deducting the tax from the overall proceeds are referred to as the…

Q: Scallop Corporation purchased oil exploration equipment for $600,000 that will be depreciated over…

A: After-tax rate of return can be defined as the financial benefit towards the invested funds after…

Q: The following is governed by an income tax rate of 25% . Depreciation rate is determined using MACRS…

A: Correct option is 1.

Q: ucky Cement wants to evaluate an acquisition of an equipment worth Rs 300,000. Its marginal tax rate…

A: In this we need to calculate the present value of buying and present value of leasing both are…

Q: Consider an asset that costs $176,000 and is depreciated straight-line to zero over its 10- year tax…

A: Cost of asset = $176,000 depreciationmethod is straight line methodlife of the asset is 10 years.But…

Q: The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece…

A: The projected residual worth of an asset at the end of its useful life is referred to as salvage…

Q: Spectacular Flooring (SF) is a wood flooring wholesale company. SF is considering building a new…

A: Please find the answer to the above question below:

Q: 10. Marshall-Miller & Company is considering the purchase of a new machine for $60,000, installed.…

A: Allocation of the cost of the asset over the useful life of that asset is term as depreciation. It…

Q: fter tax annual cost

A: Cash flow represents the money in and out of the company. It refers to the financial statement that…

Q: Consider an asset that costs $601,119 and is depreciated straight-line to zero over its 10-year tax…

A: After tax cash flow from asset is the cash received on the sale of an asset after adjustment for the…

Q: Kansas Corporation is reviewing an investment proposal that has an initial cost of $54,000. An…

A: A. Calculate the project's payback periodAnswer: Cash Payback period   Year Cash inflow Cumulative…

Q: Consider an asset that costs $666,000 and is depreciated straight-line to zero over its nine-year…

A: Cashflow means inflow or outflow of the cash. Positive cashflows (inflows) increase the cash…

Q: Consider an asset that costs $1,280,170 and is depreciated straight-line to 83,206 over its 14-year…

A: Cost of asset = 1,280,170 residual value = 83206  estimated life = 14 year annual depreciation =…

Q: percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's…

A: Aftertax salvage value refers to the amount of tax to be deducted from the sale price after the life…

Q: Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost…

A: Original Cost = $11,500,000Depreciation = $11,500,000 × 65% = $7,475,000Book Value = Orginal Cost -…

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $27…

A: Assets means the resources owned by the business. Fixed assets are depreciation over the useful life…

Q: Consider an asset that costs $1,156,294 and is depreciated straight-line to zero over its 10-year…

A: Formula. Depreciation per year =( cost - salvage value) ÷ useful life.

Q: Consider an asset that costs $700,000 and is depreciated straight-line to zero over its seven-year…

A: Salvage value is the estimated worth of an asset at the end of its useful life. The concept of…

Q: .Calculate (a) net present value, (b) payback period, and (c) internal rate of return.

A: Net Present Value is the excess of present value of cash inflow to that of present value of cash…

Q: Martin D. Martian Inc. is considering the purchase of a new argyle sock knitting machine to replace…

A: NINV is initial net investment for the project which is required at initial level of investment. It…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.