What are the annual after-tax cash receipts Financial Accounting:Brandon Smith Enterprises has provided the following data to be used in evaluating aproposed investment project:Initial investment$800,000Annual cash receipts$600,000Life of the project6 yearsAnnual cash expenses $350,000Salvage valueTax rate$85,00025%For tax purposes, the entire initial investment without any deduction for salvage value willbe depreciated over 4 years. The company uses a discount rate of 10%.When computing the net present value of the project, what are the annual after-tax cashreceipts?

To compute the annual after-tax cash receipts for Brandon Smith Enterprises' project, we follow…

Answered: Financial Accounting: Brandon Smith…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 6CE

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The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?
MCQ
Abc
After tax cash receipt
After tax cash receipt general accounting
What are the annual after tax cash receipt? Accounting question
Consider the following financial data for an investment project:• Required capital investment at n = 0: $ 100,000• Project service life: 10 years• Salvage value at n = 10: $15,000• Annual revenue: $150.000• Annual O&M costs (not including depreciation): $50.000• Depreciation method for tax purpose: seven-year MACRS• In come tax rate: 40%.Determine the project cash flow at the end of year 10.(a) $69.000(b) $73.000(c) $66.000(d) $67.000
The following data pertain to an investment currently being considered by Kalamazoo Corporation: Investment in the project: $14,000 Net annual cash inflows: 2,800 Working capital: 5,000 Salvage value: 1,000 Life of the project: 10 years The working capital would be released for use elsewhere when the project is completed. What is the net present value of the project, using a discount rate of 8% $2,566 ($251) $251 $5,251
The following data are from an after-tax cash flow analysis in year 1 for anew MACRS 5-year property. How much money would be saved in year 1 if 100% bonus depreciation is used? Initial Investment = $180,000 Regular MACRS Depreciation Deduction in Year 1 = $36,000 Before-Tax-and-Loan Cash Flow = $280,000 Loan Principal Payment = $17,500 Interest on Loan = $5,650. a. $30,240 b. $75,600 c. $37,800 d. $36,000.
General accounting
The information below relates to the purchase of equipment: investment in the project: $10,000 Net annual cash inflows: 2,400 Working capital required: 5,000 Salvage value of the equipment: 1,000 Life of the project: 8 years At the completion of the project, the working capital will be released for use elsewhere. Compute the net present value of the project, using a discount rate of 10% $606 $8,271 ($1,729) $1,729
The details of an investment project are as follows: Cost of asset bought at the start of the project $80,000 Annual cash inflow (before tax) $25,000 Cost of capital, after tax 5% each year Life of the project 8 years Salvage value at the end of 8 years $2,500 Corporation tax is 25%. Writing down allowances of 20% of the purchase price will be claimed each year. (Assume the asset is bought on the first day of the tax year and that the company's other projects generate healthy profits.) Required: a. Payback Period b. Accounting Rate of Return c. Net Present Value d. IRR

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