lates as a year property. The Market value of the asset the end of year 6 is $40,000. the company's incremental income-tax rate is 35%. The company's cash flows for the asset are as shown. 1 2 3 4 5 6 Year Initial Cost Revenue 0&M Expenses Salvage 0 $200K $60K $65K $65K $15K $15K $20K $70K $20K -) The first-year after tax-cash flow is ) The fourth-year taxable income is equal to ) The tax on depreciation recapture in year 6 is equal to $70K $25K $65K $25K $40K

lates as a year property. The Market value of the asset the end of year 6 is $40,000. the company's incremental income-tax rate is 35%. The company's cash flows for the asset are as shown. 1 2 3 4 5 6 Year Initial Cost Revenue 0&M Expenses Salvage 0 $200K $60K $65K $65K $15K $15K $20K $70K $20K -) The first-year after tax-cash flow is ) The fourth-year taxable income is equal to ) The tax on depreciation recapture in year 6 is equal to $70K $25K $65K $25K $40K

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The firm is contemplating the following: Crane acquisition cost $ 1,000,000 Years of useful life (economic life) 5 Tax rate 0% Required rate of return on equity 10% Annual revenues $ 2,000,000 Operating expenses include only: “Other expenses” of $1,500,000, plus depreciation. Note annual operating margin. What is year 1: Return on Asset? Return on Equity? EBITDA?
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HANDWRITTEN:The MARR is 6% per year. The annual worth of company 2 cash flow estimates is closest to: Note that this three are mutually exclusive alternatives.
Amazon in OKC has just invested $250,000 in equipment having a negligible salvage value (SV 0) regardless of when the equipment if replaced. O&M costs equal $50,000 the first year and increase $10.000 per year. Based on a MARR of 10% What is the Capital Recovery (CR) cost for Year 4? A. $86,428 B. $60,317 C. $47,320 D. $39,569
Max. score: 1.00 Ultra-Corporation purchased an equipment costing $300,000. The expected after-tax net income of $9,000 each year. It is predicted that the machine is expected to have a 12-year service life and a residual value $60,000. Company uses straight-lin depreciation. Compute this machine's accounting rate of return. 3% 2.5% 5% 3.75%
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At the end of a capital project the equipment has been fully depreciated and is sold for $30,000. Working capital in the amount of $10,000 is also no longer needed for the project and converted to cash. The company's tax rate is 40%.What is the total terminal cash flow for this project? A.22,000 B.8,000 C.28,000 D.40,000
Karen Corp has an asset they would like to sell. The asset has an original cost of $170,000 and accumulated depreciation of $109,000. The asset would be sold for $50,000 cash. Karen's tax rate is 40%. Calculate the after-tax cash inflow from the sale of this asset. a. $45,600 b. $54,400 c. $39,000 d. $43,400 e. $50,000 f. $30,000 g. $65,400 h. None of the above
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