An asset used in a four-year project falls in the five-year MACRS class for tax purposes.The asset has an acquisition cost of $6,110,000 and will be sold for $1,310,000 at the endof the project. If the tax rate is 21 percent, what is the aftertax salvage value of the asset?Refer to Table 8.3. (Do not round intermediate calculations and enter your answer indollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.)Aftertax salvage valuees( Prev7 of 10Next > TABLE 8.3RECOVERY PERIOD CLASSDepreciation under ModifiedAccelerated Cost RecoverySystem (MACRS)YEAR3 YEARS5 YEARS7 YEARS10 YEARS15 YEARS20 YEARS33332000.1429.10000500037502444532002449.1800.095007219314811920.1749.1440.0855.066774.0741.1152.1249.1152.0770.06177.11520893.0922.0693.0571305760892.0737.0623.052857.0893.0655.0590.048888.0446.0655.0590.045229..0656.0591.0446210.0655.0590.0446111.0328.0591.0446212.0590.0446113.0591.044621415.0590.0446116.0591.0446217.0295.0446118.0446219044612004462210446102231Depreciation is expressed as a percent of the asset's cost. These schedules are based on the IRS publication 946. How to Depreciate Propertyand other details on depreciation are presented later in the chapter. Note that five-year depreciation actually caTIes over six years because theIRS assumes purchase is made in midyear.

MACRS is accelerating depreciation method in which depreciation is more beginning and decrease in…

n asset used in a four-year project falls in the five-year MACRS class for tax purposes. he asset has an acquisition cost of $6,110,000 and will be sold for $1,310,000 at the end the project. If the tax rate is 21 percent, what is the aftertax salvage value of the asset? efer to Table 8.3. (Do not round intermediate calculations and enter your answer in ollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Aftertax salvage value

n asset used in a four-year project falls in the five-year MACRS class for tax purposes. he asset has an acquisition cost of $6,110,000 and will be sold for $1,310,000 at the end the project. If the tax rate is 21 percent, what is the aftertax salvage value of the asset? efer to Table 8.3. (Do not round intermediate calculations and enter your answer in ollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Aftertax salvage value

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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a). qw Inc. is considering the purchase of a $116,000 piece of equipment. The equipment is classified as 5-year MACRS property. The company expects to sell the equipment after two years at a price of $50,000. The tax rate is 35 percent. What is the expected after-tax cash flow from the anticipated sale?
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%?
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11. Suppose you have a balance of $5400 on your credit card, which charges an APR of 18%. If you want to pay off the balance in 18 months, how much should you pay each month? What is the total amount of interest you will end up paying? Assume that you charge no additional expenses to the card. 5400 012
A firm buys a piece of equipment for $115,866.00 and will straight-line depreciate it to zero over five years. If the tax rate is 39.00%, what is the present value of the depreciation tax shield if the cost of capital is 10.00%? Submit Answer format: Currency: Round to: 2 decimal places. Show Hint
13
Use the spreadsheet to determine the after-tax internal rate of return. For this problem, assumea a 10 year analysis period, straight-line depreciation is used, 21% corporate tax rate , an initial cost of $ 200,000, an annual benefit of $60,000 and no salvage value but instead you must pay a disposal fee of $20,000 that your corporate accountant determined is tax deductible.
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $5.7 million and will be sold for $1.8 million at the end of the project. If the tax rate is 21 percent, what is the aftertax salvage value of the asset? Refer to the MACRS schedule. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567) Aftertax salvage value
An asset used in a 4-year project falls in the 5-year MACRS class for tax purposes. The asset has an acquisition cost of $9,300,000 and will be sold for $2,760,000 at the end of the project. If the tax rate is 22 percent, what is the aftertax salvage value of the asset? Refer to (MACRS schedule) (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567) Aftertax salvage value 4
Grove Media plans to acquire production equipment for $845,000 that will be depreciated for tax purposes as follows: year 1, $329,000; year 2, $189,000; and in each of years 3 through 5, $109,000 per year. A 10 percent discount rate is appropriate for this asset, and the company’s tax rate is 20 percent. Required: Compute the present value of the tax shield resulting from depreciation. 2. Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($169,000 per year).

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