Equipment associated with manufacturing small railcars had a first cost of $190000 with an expected salvage value of $30,000 at theend of its 5-year life. The revenue was $642000 in year 2, with operating expenses of $98,000. If the company's effective tax rate was31.00%, what would be the difference in taxes paid in year 2 if the depreciation method were straight line instead of ModifiedAccelerated Cost Recovery System (MACRS)? The MACRS depreciation rate for year 2 is 32%.The difference in taxes paid is determined to be $

The objective of the question is to calculate the difference in taxes paid in year 2 if the…

Answered: Equipment associated with manufacturing…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Last year, a company's gross income was $ 175,000, expenses (not including depreciation) were $ 55,000, a land purchase of $200,000, and the depreciation allowance was $ 6,000. If federal income taxes are 21%, state income taxes are 6 %, and local income taxes are 1%, what is the After Tax Cash Flow (ATCF) for that year?
Last month, HighPower, which specializes in wind power plant design and engineering, made a capital investment of $400,000 in physical simulation equipment that will be used for at least 5 years, then sold for approximately 25% of the first cost. By law, the assets are MACRS depreciated using a 3-year recovery period. By how much will the sale cause HighPower’s TI and taxes to change in year 5 if the federal tax rate is 35% and the state tax rate is 6.5%?
Savant Properties in Knoxville, TN built a shopping center at a cost $50M in year 2010. The company started leasing space in July of 2010. Assuming the land was purchased for $5M; determine the depreciation charges through 2013 if the property was sold in November 2013.
Engineering Economics: Depreciation Methods
Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1,340,000 and will have a salvage value of $170,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. All dollar amounts are expressed in real dollars. Depreciation follows MACRS 5-year property, taxes are 25%, the real after-tax MARR is 10%, and inflation is 3.4%. a. Determine the actual after-tax cash flows for each year. ATCFO - $ ATCF₁ - $ ATCF₂ = $ ATCF3 = $ ATCF4-S ATCFS = $ ATCF6-$ ATCF7 = $ ATCFB = $ b. Determine the PW of the after-tax cash flows. PWST-$ c. Determine the AW of the after-tax cash flows. AWST-$ d. Determine the FW of the after-tax cash flows. FWST - S e. Determine the combined IRR of the after-tax cash flows. IRR % f. Determine the combined ERR of the after-tax cash flows.…
Under the General Depreciation System (GDS) of asset classification, any asset that is not in a stated class is automatically assigned a recovery period of: (a) 5 years (b) 7 years (c) 10 years (d) 15 years
On its tax return at the end of the current year Webnet Inc. has $6 million of tax depreciation in excess of depreciation in its income statement. A disclosure note reveals that $1 million of the $6 million difference will reverse itself next year, and the remainder will reverse over the next 4 years. In the absence of other temporary differences, in the balance sheet at the end of the current year Webnet would report ?
ABC Corporation makes it a policy that for any new equipment purchased, the annual depreciation cost should not exceed 7% of the first cost at any time with no salvage value. Determine the length of service life necessary if the depreciation used is the SYD method. Draw the cashflow if necessary
How does the tax depreciation method allow the firms to benefit from the tax advantages of depreciating assets more quickly?
A piece of equipment will be DDB depreciated over an expected life of 12 years. There is a first cost of $25,000 and an estimated salvage of $2500. The depreciation charge for year 1 is: Less than $4000 O Between $4000-$4200 Between $4200-$4400 O Higher than $4400
A machine costs P7,000, last 8 years and has a salvage value at the end of life of P350. Determine the depreciation charge during the 4th year and the book value at the end of 4 years by the following methods at an interest rate of 12%. a) Straight line Method b) Declining Balance Method c) SYD Method
A machine is purchased for P600,000 with a salvage value of P 85,000 after 25 years. What is the total depreciation in the first 10 years using straight line method?

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS