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- An oil refinery has decided to purchase some new drilling equipment for $440,000. The equipment will be kept for 7 years before being sold. The estimated SV for depreciation purposes is to be $18,000. Using the SL method, what is the BV at the end of the depreciable life? Choose the correct answer below. A. The BV at the end of the depreciable life is $36,000. B. The BV at the end of the depreciable life is $44,857. C. The BV at the end of the depreciable life is $18,000. D. The BV at the end of the depreciable life is $0.date period In Santa Barbara, the sales tax is 7.55%. What would be the final cost of a surfboard if it was being sold for $1,200 ?A project capitalized for P 2,850,000 invested in depreciable asset will earn a uniform annual revenue of P 1,650,000 for 10 years. The costs for operation and maintenance total P 725,000 a year, and taxes and insurance will cost 3% of the first cost each year. The company expects its capital to earn 14% before income taxes. *** Type the letter of the correct answer. Using ROR method 1. The depreciation cost is: a) P 546,383.59 2. The total annual cost is: a) P 957,883.59 3. The rate of return is: • Using AW method 5. The annual revenue is: a) 44.92% 4. Is this a desirable investment? a) NO b) YES a) P 1,750,000 6. The total annual cost is: a) P 1,755,883.59 7. Annual worth is: b) P 147,383.59 a) P 293,116.41 8. Would you recommend a) NO b) P 1,356,883.59 b) 38.85% b) P 3,240,000 b) P 1,543,606.94 b) - P 105,883.59 investing? b) YES c) P 285,000.00 c) P 1,144,606.94 c) 24.28% c) MAYBE c) P 2,429,600 c) P 1,356,883.59 c) P 155,500.00 c) MAYBE d) P 334,106.94 d) P 1,095,500.00 d) 22.46%…
- Updated class practice problem to include state tax and proper consideration of asset disposal (1/2 depreciation and need BV to determine recapture or loss) GIVENS: Initial Cost $150,000 Annual net saving $50,000 state Useful life 6 years federal 6.50% 21.0% Salvage value $30,000 tax rate BTCF-D TI tax rate BTCF-Income Tax Year Taxable BTCF MACRS Depreciation Income Income Tax ATCF 0 ($150,000) ($150,000) 1 50,000 20% ($30,000) $20,000 $4,618 45,382 2 50,000 32% ($48,000) $2,000 $462 49,538 3 50,000 19.20% ($28,800) $21,200 $4,895 45,105 4 50,000 11.52% ($17,280) $32,720 $7,555 42,445 5 50,000 11.52% ($17,280) $32,720 $7,555 42,445 6 50,000 2.88% ($4,320) $45,680 $10,548 63,523 indudes 6 and disposal disposal 30,000 BV= $4,320 $25,680 $5,930 recapture ROR Question 1 What is the ATCF ROR when state taxes and asset disposal are properly considered?Your business buys a delivery van for $28,000. You figure the van will be useful for 5 years and have a value of $5,000 at the end of the 5-year period. What is the (a) basis, (b) useful life, (c) salvage value, (d) depreciable basis, (e) accumulated depreciation at the end of year 2 if you take $4,600 depreciation each year, and (f) the book value at the end of year 2?Give typing answer with explanation and conclusion Chanveida finds a home listed for $48k. Similar homes in good condition sell for $60k (market value). She buys the home and then sells it. Her adjusted cost basis is $44,000, net sell price is $55,000, and overall tax rate is 30%. Assume no financing is used and there is no depreciation taken. Determine Chanveida's Net Profit from sale.
- 1) Depreciation, a type of expense, is included in the A) research and development B) interest category. C) selling D) general and administrative E) retainedEderly Quarry sells a wide variety of cut limestone for residential and commercial building construction. A recent quarry expansion cost $2.3 million and added an estimated 90,000 tons of reserves. Year Volume, 1000 Tons Price, $ per Ton 1 10 75 2 9 70 3 15 70 4 10 76 5 18 85 Estimate the cost depletion allowance for the next 5 years, using the projections made by the owner, John Ederly. The cost depletion allowance for the next 5 years is estimated to be $Updated class practice problem to include state tax and proper consideration of asset disposal (1/2 depreciation and need BV to determine recapture or loss) GIVENS: Initial Cost $150,000 Annual net saving $50,000 state Useful life Salvage value $30,000 6 years federal 6.50% 21.0% tax rate -BTCF-D TI tax rate BTCF-Income Tax Year Taxable Income BTCF MACRS Depreciation ATCF Income Tax 0 ($150,000) ($150,000) 1 50,000 20% ($30,000) $20,000 $4,618 45,382 2 50,000 32% ($48,000) $2,000 $462 49,538 3456 50,000 19.20% ($28,800) $21,200 $4,895 45,105 4 50,000 11.52% ($17,280) $32,720 $7,555 42,445 50,000 11.52% ($17,280) $32,720 $7,555 42,445 50,000 2.88% disposal 30,000 BV= ($4,320) $4,320 $45,680 $25,680 $5,930 $10,548 63,523 includes 6 and disposal recapture ROR Question 1 What is the ATCF ROR when state taxes and asset disposal are properly considered?
- A mining corporation purchased $120,000 of production machinery and depreciated it using 40% bonus depreciation with the balance using 5-year MACRS depreciation, a 5-year depreciable life, and zero salvage value. The corporation is a profitable one that has a 22% combined incremental tax rate.At the end of 5 years the mining company changed its method of operation and sold the production machinery for $40,000. During the 5 years the machinery was used, it reduced mine operating costs by $32,000 a year, before taxes. If the company MARR is 12% after taxes, was the investment in the machinery a satisfactory one?What are three depreciable costs that are included in an asset’s basis?RZ Company, a calendar year taxpayer, paid $6,400,000 for a commercial office building and allocated $400,000 of the cost to the land and $6,000,000 of the cost to the building. RZ place the realty in service on May 11. Refer to the appropriate MACRS Table in Chapter 7 to compute RZ's first-year depreciation on the realty. Use Table 7-4. Multiple Choice $136,380 $102,720 $96,300 None of these choices are correct
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