Question 27Southern Inc. purchases an asset for $184,000. This asset qualifies as a 3-year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1 = 33.33%, year 2= 44.45%, year 3 = 14.81%, and year 4 = 7.41%. Southern has a tax rate of 20%. If the asset is sold at the end of 3 years for $40,000, what is the cash flow from disposal?$54,261$43,409O $84,782$67,826$34,727Question 27 of

MACRS refers to the Modified accelerated cost recovery system.Under MACRS,Annual depreciation = Cost…

Answered: Southern Inc. purchases an asset for…

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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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.
Ivanhoe Company purchased a machine with a list price of $166000. They were given a 5% discount by the manufacturer. They paid $1000 for shipping and sales tax of $7500. Ivanhoe estimates that the machine will have a useful life of 10 years and a salvage value of $50000. If Ivanhoe uses straight-line depreciation, annual depreciation will be $10770. $16620. $11620. $11550.
A company purchased a land by signing a note with the seller, requiring $100,000 down payment, payment of $120,000 one year from purchase, and $80,000 three years from the purchase. The note is a non-interest bearing, but the going rate for similar notes is 10%. PV of 1 at 10% for 1 period is 0.91. PV of 1 at 10% for 3 periods is 0.75. How much is the cost of land acquired?
An asset used in a four-year project falls in the five-year MACRS class (MACRS schedule) for tax purposes. The asset has an acquisition cost of $7,800,000 and will be sold for $1,860,000 at the end of the project. If the tax rate is 25 percent, what is the aftertax salvage value of the asset? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
Maris Co. purchased a machine on January 1, 2021, for $2,500,000 for the express purpose of leasing it. The machine is expected to have a five-year life, with no salvage value, and be depreciated on a straight-line monthly basis. On January 1, 2021, Maris leased the machine to Dunbar Company for $750,000 a year for a four-year period with an implicit rate of 6%. Payments are due to Maris on January 1 of each year starting in 2021. This is an operating lease from the lessee perspective. a. Create the journal entries for the lessee, Dunbar, for January 1, 2021 b. Create the journal entries for the lessee, Dunbar, for December 31, 2021.
You pay $18,000 for new equipment plus you pay $2,000 to install it, which is added to the cost basis. Each year for five years, you earned $5,000 from the use of this equipment from which you then needed to subtract $1,000 in expenses. (a) Using straight-line depreciation over a 5-year lifetime (with a half-year adjustment in years 1 and 6) and a tax rate of 28%, what was your after-tax cash flow (ATCF) from this investment in year 3? (b) Using the GDS depreciation schedule for a 5-year recovery period, what was your ATCF in year 3? GDS depreciation schedule for a 5-year recovery period year = 12345 6 factor = 0.20 0.32 0.192 0.1152 0.1152 0.0576 (c) What is the present worth at time 0 of this investment using a MARR of 8%?
A company purchases an asset that costs $30,000. This asset qualifies as 3-year property under MACRS The company uses an after-tax discount rate of 13% and faces a 40% income tax rate, (a) Use the appropriate present value factors found in Appendix C. Table 1, to determine the present value of the depreciation deductions for this firm over the specified four-year period. Refer to Exhibit.12.4. (Round depreciation expense to 2 decimal places.) Depreciation Deduction Tax Present Values Sipped Vear Savings 21 3. 4
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.
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A firm purchased an asset with a 5-year life for $90,000, and it cost $10,000 for shipping and installation. According to the current tax laws the cost basis of the asset at time of purchase is:
AP Company purchased a Machine at cost of $150,000 on Jan 1, 2015. This machine falls under MACRS 5-Year property. AP pays tax at 38%. This machine was sold on Dec 31, 2018 at $32,000. What is the after-tax salvage value? Relevant Depreciation Table Dep Year Rate 1 20.00% 2 32.00% 3 19.20% 4 11.52% 11.52% 6. 5.76% a) $29,689.60 b) $25,920.00 c) $19,840.00 d) $23,123.20
bhavu

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