Marshall-Miller & Company is considering the purchase of a new machine for $50,000, installed. Themachine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. Thefirm expects to operate the machine for 4 years and then to sell it for $15.500. If the marginal tax rate is20%, what will the after-tax salvage value be when the machine is sold at the end of Year 4?Depreciation Rate0.200.32Year1234560.190.120.110.00

An asset's projected or estimated worth at the end of its useful life, net of any taxes, is its…

Marshall Miller & Company is considering the purchase of a new machine for $50,000, instated. The machine has a tax ide of 5 years, and it can be depreciated according to the depreciation rates below. The frm expects to operate the machine for 4 years and then to sell it for $15.500 i the marginal tax rate is 20%, what will the after-tax salvage value be when the machine is sold at the end of Year 4? Year Depreciation Rate 0.20 0.32 0.19 0.12 0.11 0.00 2 3

Marshall Miller & Company is considering the purchase of a new machine for $50,000, instated. The machine has a tax ide of 5 years, and it can be depreciated according to the depreciation rates below. The frm expects to operate the machine for 4 years and then to sell it for $15.500 i the marginal tax rate is 20%, what will the after-tax salvage value be when the machine is sold at the end of Year 4? Year Depreciation Rate 0.20 0.32 0.19 0.12 0.11 0.00 2 3

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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Daily Enterprises is purchasing a $14,000,000 machine. The machine will depreciated using straight-line depreciation over its 10 year life and will have no salvage value. The machine will generate revenues of $8,000,000 per year along with costs of $3,000,000 per year. If Daily's marginal tax rate is 28%, what will be the cash flow in each of years one to 10 (the cash flow will be the same each year)? Enter your answer below rounded to the nearest whole number. Number
Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $197,000. The equipment will have an initial cost of $435,000 and have a 8 year life. If the salvage value of the equipment is estimated to be $79,000, what is the payback period? Multiple Choice 1.80 years 2.21 years 2.96 years 8.00 years
A company has purchased a machine at the cost of $35,000. The machine is expected to provide annual savings of $50,000 for two years and is to be depreciated by the MACRS three-year recovery period. This machine will require annual operating and maintenance costs in the amount of $15,000. The salvage value at the end of two years is expected to be $8,000. a) Assuming a marginal tax rate of 30% and MARR of 10%, what are the following for the Income Statement: Revenue,Expenses, Depreciation, Taxable Income, Taxes (30%), Net Income. What are the following for the Cash Flow Statement: Net Income, Depreciation, Capital Expenditure, Salvage Value, Gains Tax / Credit, Net After Tax Cash Flow. b) Assume MARR of 8%, calculate NPV of the project.
Rooney, Incorporated is considering the purchase of a new machine costing $700,000. The machine's useful life is expected to be 8 years with no salvage value. The straight-line depreciation method will be used. The net increase in annual after-tax cash flow is expected to be $156,000. Rooney estimates its cost of capital to be 12%. (The present value of a $1 annuity for 8 years at 12% is 4.968, and the present value of $1 to be received in 8 years is 0.404.) The net present value of the investment in the machine under consideration is: Multiple Choice $156,000. $75,008. $87,500. $126.800.
Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The machine would increase EBDT by $42,000 annually. Builtrite’s marginal tax rate is 34%. What is the TCF associated with the purchase of this machine? $5,100 $7,500 $0 $9,900
St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings before depreciation from $30,000 to $52,000 per year. The new machine will cost $82,500, and it will have an estimated life of 8 years and no salvage value. The new riveting machine is eligible for 100% bonus depreciation at the time of purchase. The applicable corporate tax rate is 25%, and the firm's WACC is 20%. The old machine has been fully depreciated and has no salvage value. What is the NPV of the project? Negative value, if any, should be indicated by a minus sign. Round your answer to the nearest cent.
Your facility is undergoing a major expansion, which will require significant capitalinvestment into new machinery. The total cost of the machinery will be $7.2 Million, and theywill be purchased outright immediately. This machinery is considered a 7-year MACRSasset. However, you expect to use it for only six years before selling it for $1.5 Million. How much should the company deduct from their taxable income for depreciation expensesin year 3 for this machinery?a. $1,259,280b. $996,930c. $1,028,571d. $1,200,000
Caradoc Machine Shop is considering a four-year project to improve itsproduction efficiency. Buying a new machine press for $410,000 isestimated to result in $150,000 in annual pre-tax cost savings. The pressfalls into Class 8 for CCA purposes (CCA rate of 20% per year), and it willhave a salvage value at the end of the project of $55,000. The press alsorequires an initial investment in spare parts inventory of $20,000, alongwith an additional $3,100 in inventory for each succeeding year of theproject. If the shop’s tax rate is 35% and its discount rate is 9%.Calculate the NPV of this project. (Do not round your intermediatecalculations. Round the final answer to 2 decimal places. Omit $ sign inyour response.)NPV $ Should the company buy and install the machine press?
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$670,000at the end of the project's and assets ten year life. Ace's marginal tax rate is32%. The firm will have to pay$8,047,675to buy the asset. You have estimated that they could sell the asset for$787,309to a Brazilian firm at the end of the project. Answer in dollars and cents.
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?
Please show proper steps.
Paulita's Products Inc. is considering the new piece of equipment that costs P75,000. The equipment is expected to generate revenues before-tax cash inflows of P25,000 per year for five year. The equipment would be depreciated using straight-line method over its five-year useful life. Upon retirement, the machine is expected to have a market value of P8,000. The company considers the maximum impact of income taxes in all of its capital investment decisions. The company has a 35 percent income tax rate and desires an after-tax return of 12 percent on its investment. The present value of 1, end of 5 years at 12% is 0.56743 and for ordinary annuity is 3.60478. The net present value of the equipment is: c. P 21,248 b. P 4,539 a. P 7,042 d. P 5,453

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