Homework Help is Here – Start Your Trial Now!
Business
Economics
In 2013, you spent $55,000 for new equipment plus $5,000 to install it, which is added to the cost basis. Each year for four years, you earned $50,000 by using this equipment before subtracting $30,000 in expenses. Use the GDS depreciation factors shown below and a tax rate of 28%. GDS (MACRS) depreciation factors from Table 7-3 for a 3-year recovery period Year = 2014 2015 2016 0.0741 Factor = 0.4445 0.1481 2013 0.3333 a. What depreciation was claimed on this equipment for the year 2015? b. What was the remaining book value of that equipment after the 2015 depreciation was taken? C. What was the after-tax cash flow (ATCF) obtained in 2015 from the use and depreciation of this equipment? d. If the equipment was sold in 2016 for $10,000 before any more depreciation was taken, what was this

In 2013, you spent $55,000 for new equipment plus $5,000 to install it, which is added to the cost basis. Each year for four years, you earned $50,000 by using this equipment before subtracting $30,000 in expenses. Use the GDS depreciation factors shown below and a tax rate of 28%. GDS (MACRS) depreciation factors from Table 7-3 for a 3-year recovery period Year = 2014 2015 2016 0.0741 Factor = 0.4445 0.1481 2013 0.3333 a. What depreciation was claimed on this equipment for the year 2015? b. What was the remaining book value of that equipment after the 2015 depreciation was taken? C. What was the after-tax cash flow (ATCF) obtained in 2015 from the use and depreciation of this equipment? d. If the equipment was sold in 2016 for $10,000 before any more depreciation was taken, what was this

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
Question
100%

Do not use excel please. Show equations used.

Notes: Every MARR is given as an effective annual rate unless stated otherwise. Show each rate of return as a percentage with 2 decimal places such as 6.37%. You may round off all PW, AW, or FW values to the nearest dollar.
Transcribed Image Text:Notes: Every MARR is given as an effective annual rate unless stated otherwise. Show each rate of return as a percentage with 2 decimal places such as 6.37%. You may round off all PW, AW, or FW values to the nearest dollar.
In 2013, you spent $55,000 for new equipment plus $5,000 to install it, which is added to the cost basis. Each year for four years, you earned $50,000 by using this equipment before subtracting $30,000 in expenses. Use the GDS depreciation factors shown below and a tax rate of 28%. GDS (MACRS) depreciation factors from Table 7-3 for a 3-year recovery period Year: - 2014 2015 2016 0.0741 Factor = 0.4445 0.1481 2013 0.3333 a. What depreciation was claimed on this equipment for the year 2015? b. What was the remaining book value of that equipment after the 2015 depreciation was taken? C. What was the after-tax cash flow (ATCF) obtained in 2015 from the use and depreciation of this equipment? d. If the equipment was sold in 2016 for $10,000 before any more depreciation was taken, what was the capital gain or loss reported on this equipment in that year?
Transcribed Image Text:In 2013, you spent $55,000 for new equipment plus $5,000 to install it, which is added to the cost basis. Each year for four years, you earned $50,000 by using this equipment before subtracting $30,000 in expenses. Use the GDS depreciation factors shown below and a tax rate of 28%. GDS (MACRS) depreciation factors from Table 7-3 for a 3-year recovery period Year: - 2014 2015 2016 0.0741 Factor = 0.4445 0.1481 2013 0.3333 a. What depreciation was claimed on this equipment for the year 2015? b. What was the remaining book value of that equipment after the 2015 depreciation was taken? C. What was the after-tax cash flow (ATCF) obtained in 2015 from the use and depreciation of this equipment? d. If the equipment was sold in 2016 for $10,000 before any more depreciation was taken, what was the capital gain or loss reported on this equipment in that year?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
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)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
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-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS