Sandhill Corporation just purchased computing equipment for $22,000. The equipment will be depreciated using a five-year MACRS depreciation schedule. If the equipment is sold at the end of its fourth year for $14,000, what are the after-tax proceeds from the sale, assuming the marginal tax rate is 35 percent? (Round answer to 2 decimal places, e.g. 15.25.)
Sandhill Corporation just purchased computing equipment for $22,000. The equipment will be depreciated using a five-year MACRS depreciation schedule. If the equipment is sold at the end of its fourth year for $14,000, what are the after-tax proceeds from the sale, assuming the marginal tax rate is 35 percent? (Round answer to 2 decimal places, e.g. 15.25.)
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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Sandhill Corporation just purchased computing equipment for $22,000. The equipment will be
Transcribed Image Text:EXHIBIT 11.7 MACRS Depreciation Schedules by Allowable Recovery Period
The MACRS schedule lists the tax depreciation rates that firms use for assets placed into service after
the Tax Reform Act of 1986 went into effect. The table indicates the percentage of the cost of the asset
that can be depreciated in each year during the period that it is being used. Year I is the year in which
the asset is first placed into service.
Year
3-Year
5-Year
7-Year
10-Year
15-Year
20-Year
1
5.00%
33.33%
20.00%
14.29%
10.00%
3.75%
2
44.45
32.00
24.49
18.00
9.50
7.22
3
14.81
19.20
17.49
14.40
8.55
6.68
4
7.41
11.52
12.49
11.52
7.70
6.18
5
11.52
8.93
9.22
6.93
5.71
6.
5.76
8.92
7.37
6.23
5.29
7
8.93
6.55
5.90
4.89
8
4.46
6.56
5.90
4.52
9
6.55
5.91
4.46
10
3.28
5.90
4.46
11
5.91
4.46
12
5.90
4.46
13
5.91
4.46
14
5.90
4.46
15
5.91
4.46
16
2.95
4.46
17
4.46
18
4.46
19
4.46
20
4.46
21
2.24
Total
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
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