IU purchased a super computer for $15,000. This computer qualifies for 5-year recovery under MACRS. Use the Table providedin lectures. IU has a tax rate of 20%. Assume that the super computer is sold for $4,000 at the end of year 4. What is the after-tax salvage value?O $2,765.21O $1,877.00O $3,718.40O $2,765.34

The after-tax salvage value will be the value after deducting the profit from the sales from SV and…

Answered: IU purchased a super computer for…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You purchase a new pizza oven for $9,950 which will have a scrap value of $900. Assuming a 35% depreciation rate, how much depreciation would you recognize in year one when using the Double Declining Balance depreciation method? $2,810 $3167.50 $3482.50 $3.572.75
An industrial laser can be purchased and installed for $90,000$. Assume that the GDS recovery rate is given for the 7-year period. We expect that the laser stays in service for eight years, and we gain $10,000$ from the disposal of it at the end of year eight. The $11,038$ net annual value that can be attributed to this laser is constant over all the eight years. Assume that the effective income tax rate is $0.25$ and the after-tax MARR equals $15%$ per year. What is the ATCF at the end of year six? Consider the depreciation deduction based on the 7-year period GDS recovery rate.
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You work for Tamimi Industries, which purchased robotics equipment for $500,000 six years ago. The equipment is in place today and has a total 10-year useful life, no salvage value, and a 5-year MACRS recovery period. The effective tax rate is 21% and the actual cash flow and depreciation amounts are shown. GI, S 250,000 280,000 200,000 260,000 260,000 180,000 Expenses, $ |-120,000 -120,000 F122,000 -124,000 -126,000 128,000 Depreciation, $ 100,000 160,000 96,000 57,600 57,600 28,800 Year 1 3 14 5 6 EBIT is calculated for years 1 to nand includes the Por Samounts. True or False True False
Suppose that you are asked to derive the depreciation rate for a house on rural property. The contributory value of the house is $50,000, the replacement cost is estimated to be $80,000, and its effective age is 10 years. Calculate the annual percentage depreciation for this house. 3% 3.75% 4% 4.75%
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Give only typing answer with explanation and conclusion Tony’s Racing Engines, Inc. wants to replace a 10-year-old cylinder boring machine with a new machine that is more efficient. The old machine cost $30,000 when new and has a current book value of $9,500. TRE can sell the machine to a buyer for its current book value. TRE’s tax rate is 25%. What is the effect of the sale of the old machine on the initial outlay for the new machine?
An equipment's with 5 years useful life is with initial cost of $1,000,000. After 5 years, the equipment's useful life will be The equipment's value will be depreciated linealy. Tax rate = 20% . What is the after tax residual value of this equipment at the end of 4th year if the equipment was sold at 2,000. $ 18200 $ 25700 $20300 $41600
ATCF Operations. You can buy a building for $1,000 and sell it after 10 years for $1,300. (NOI = 60; Annual Depreciation = $45; Ordinary Tax Rate = 40%; Depreciation Recapture Tax = 30%; Capital Gain Tax = 20%) What is your ATCF in year 7? 1. 6 54 !3! C 211 C 254 C 268 C 273 C 489

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