What is the equipment's after -tax salvage value for these accounting question? Karsted Air Services is now in the final year of aproject. The equipment originally cost $24 million,of which 100% has been depreciated. Karsted cansell the used equipment today for $10 million, andits tax rate is 30%. What is the equipment's after-tax salvage value?

Step 1: Define Salvage ValueSalvage value, also referred to as residual value or scrap value, is the…

Answered: Karsted Air Services is now in the…

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 18E

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Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
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?
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace this printer in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculate yearly depreciation using the double-declining-balance method.
Karsted Air Services is now in the final year of a project. The equipment originally cost $27 million, of which 80% has been depreciated. Karsted can sell the used equipment today for $6.75 million, and its tax rate is 35%. What is the equipment's after-tax salvage value?
Nozark Corp. is now in the final year of a project. The equipment originally cost $9,179, and the asset has been has been depreciated on a straight-line basis to a book value of $736. Nozark can sell the used equipment for $2,448, and its tax rate is 30%. The equipment's net after-tax salvage value is $_________. In other words, find the net after-tax cash flow effect of selling the equipment. Do not round any intermediate work. Round your *final* answer to 2 decimal places (example: 12.34567 = 12.35). Do not enter the $ sign.
Karsted Air Services is now in the final year of a project. Theequipment originally cost $29 million, of which 75% has been depreciated. Karsted can sellthe used equipment today for $8 million, and its tax rate is 35%. What is the equipment’safter-tax salvage value?
Allen Air Lines must liquidate some equipment that is being replaced. Theequipment originally cost $12 million, of which 75% has been depreciated.The used equipment can be sold today for $4 million, and its tax rate is40%. What is the equipment’s after-tax net salvage value?
An asset that was originally purchased for $60,818 is being depreciated straight-line over its useful life. 83% of the asset has been depreciated. The asset can be sold for $35,191. If the company's tax rate is 34%, what is the after-tax salvage of this asset? Express your answer to the nearest whole number.
McPherson Company must purchase a new milling machine. The purchase price is $50,000, including installation. The machine has a tax life of 5 years, and it can be depreciated according to the following rates. The firm expects to operate the machine for 4 years and then to sell it for $12,500. 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 4? Depreciation Rate Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 a. $10,900 b. $9,837 c. $8,878 d. $9,345 e. $10,335 0.20 0.32 0.19 0.12 0.11 0.06
14) Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $11.2 million, of which 75% has been depreciated. The used equipment can be sold today for $3.2 million, and its tax rate is 25%. What is the equipment's after-tax net salvage value? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar. ________$
Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $13.8 million, of which 70% has been depreciated. The used equipment can be sold today for $4.6 million, and its tax rate is 25%. What is the equipment's after-tax net salvage value? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000.

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Karsted Air Services is now in the final year of a project. The equipment originally cost $24 million, of which 100% has been depreciated. Karsted can sell the used equipment today for $10 million, and its tax rate is 30%. What is the equipment's after- tax salvage value?