IntroTime Weiner Inc. is now at the end of the final year of a project. The firm originally bought some projectequipment for $46,000, which could now be sold for $27,600. 44% of the equipment cost has alreadybeen depreciated. The company's tax rate is 34%.Part 1What is the after-tax salvage value? If the equipment's final market value is less than its book value,the firm will receive a tax credit as a result of the sale.0+ decimalsAttempt 1/1Save

Salvage value net of tax is that amount which is received by the investor from selling the assets at…

Answered: Intro Time Weiner Inc. is now at the…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk

Section: Chapter Questions

Problem 3P

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9. The Lumber Yard is considering a 5-year project that requires initial investment of $96,000 in fixed assets that will be depreciated using the straight-line method to a zero over its 6-year tax life. The company has a marginal tax rate of 32%. If the fixed assets can be sold at $20,000 at the end of the project, how much is the after tax salvage value? A. $5,120 B. $17,280 C. $13,160 D. $25,440 10. A credit card company quotes you an APR of 18%. What is the actual rate of interest you are paying if interest is computed monthly? A. 18.90% B. 19.20% C. 20.62% D. 19.56%
3. Suppose that the new equipment has a cost basis of $12,000 and a salvage value of $3,000 at the end of 6 years. This asset is depreciated by the Straight-Line method. The effective income tax rate is 40 % and the after-tax MARR ic = 10%. If the company is going to sell this asset after 3 years at the market value of $6,000, what is the minimum profit per year this asset should produce to breakeven the investment? (20%)
A company has purchased a machine (CCA rate 24%) at $300,000 and has a tax rate of 33.00%. By how much will the NPV change if the company is able to obtain a $13,000 salvage value for its machine at the end of the project's life in Year 4? Assume a discount rate of 11.20% and that all else remains the same. Question 10Answer a. $8,502 b. $10,415 c. -$1,913 d. $6,589 e. $10,075
#17 Daily Enterprises is purchasing a $10.51 million machine. It will cost $50,155.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.48 million per year along with incremental costs of $1.46 million per year. Daily's marginal tax rate is 34.00%. The cost of capital for the firm is 15.00%. (answer in dollars..so convert millions to dollars) What is the year 0 cash flow for the project? Submit Answer format: Currency: Round to: 2 decimal places.
身 I LL Canvas Foley Systems is considering a new project whose data are shown below. Under the new tax law, the equipment for the project is eligible for 100% Time bonus depreciation, so it will be fully depreciated at t = 0. After the project's 3-year life, the equipment would have zero salvage value. The project Attemp would require additional net operating working capital (NOWC) that would be recovered at the end of the project's life. Revenues and operating costs 1 Hour are expected to be constant over the project's life. What is the project's NPV? (Hint: Cash flows from operations are constant in Years 1 to 3.) Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC %0'01 Equipment cost $75,000 Required net operating working capital NOWC) $15,000 Annual sales revenues $73,000 Annual operating costs $25,000 Tax rate 25.0% O $2,546 O $39,357 O $4,571 O S34,167 O00 08 000 F4 $ % 2 9 6 to M S N
10. Marshall-Miller & Company is considering the purchase of a new machine for $60,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 5 years and then to sell it for $18,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 5? Complete the table -THIS QUESTION WILL BE ON THE FINAL EXCEPT WITH DIFFERENT NUMBERS. You will fill in the entire table. I am giving you a few numbers to help you check your work Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 20% 32% 19% 12% 11% 6% MACRS % 7,200 Depreciation expense 3,600 $0 Book value 48,000 If we sell at the end of year 5 for $18,500 then determine if we have a gain or a loss and the appropriate tax consequence| Gain of 14,900 tax owed is $5,960
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29. X Corporation is considering buying a $25,000 machine. Its estimated useful life is 5 years, with no salvage value. X anticipates annual net income after taxes of $1,500 from the new machine. What is the rate of return on average investment, assuming that X uses straight-line depreciation and that the net income is earned uniformly throughout each year? A. 6.0% B. 8.0% C. 12.0% D. 26.0% E. 52.0%
A firm depreciated its assets with regard to an investment to $0.00 book value by the end of the project's 15 year life. However, the firm expects to sale the assets to have a scrap market value of $1,200,000 in 15 years. What is the PV of the after-tax salvage value if r = 14% per year, and the firm's tax rate is 28%?
Acefacto Inc., has asked for you to calculate the after-tax salvage value of an asset it plans on using in a construction project. The project will be depreciated straight line to a value of $670,000 at the end of the project's and assets ten year life. Ace's marginal tax rate is 31%. The firm will have to pay $8,802,175 to buy the asset. You have estimated that they could sell the asset for $595,641 to a Brazilian firm at the end of the project. Answer in dollars and cents.
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