Exercise 24-4 (Algo) Payback period, unequal cash flows, and depreciation adjustment LO P1 A machine can be purchased for $90,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $18,000. Income Year 1 $6,000 Year 2 $15,000 Year 3 $36,000 Year 4 $22,500 Year 5 $60,000 Compute the machine's payback period. (Round payback period answer to 2 decimal places.) Answer is not complete. Year Net Income Net Cash Cumulative Net Depreciation Flow Cash Flow Initial invest $ (90,000) S (90,000) Year 1 $ 6,000 S 18,000 24,000 (66,000) Year 2 15,000 18,000 Year 3 36,000 18,000 Year 4 22,500 18,000 Year 5 60,000 18,000 0 0 Payback period =

Exercise 24-4 (Algo) Payback period, unequal cash flows, and depreciation adjustment LO P1 A machine can be purchased for $90,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $18,000. Income Year 1 $6,000 Year 2 $15,000 Year 3 $36,000 Year 4 $22,500 Year 5 $60,000 Compute the machine's payback period. (Round payback period answer to 2 decimal places.) Answer is not complete. Year Net Income Net Cash Cumulative Net Depreciation Flow Cash Flow Initial invest $ (90,000) S (90,000) Year 1 $ 6,000 S 18,000 24,000 (66,000) Year 2 15,000 18,000 Year 3 36,000 18,000 Year 4 22,500 18,000 Year 5 60,000 18,000 0 0 Payback period =

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

22nd Edition

ISBN:9781305666160

Author:James A. Heintz, Robert W. Parry

Publisher:James A. Heintz, Robert W. Parry

Chapter18: Accounting For Long-term Assets

Section: Chapter Questions

Problem 3CE

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Project Year MACRS Depreciation Rate Year 0 Year 1 33.33% 44.45% Year 2 14.81% Year 3 7.41% A machine is purchased for $850,000 and is used through the end of Year 2. The machine will be depreciated using the 3-Year MACRS schedule in the table above. At the end of Year 2, the machine is sold for $75,000. What is the after-tax cash flow from the sale of the machine at the end of Year 2 if the firm's marginal tax rate is 35%? O $57,962 $70,795 O $79,608 O $55,998 O $62,985 O $75,000
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