The following information relating to an investment in PPE has been extracted from the books of Vandelay Industries Ltd: Total purchase price $59,993; salvage value $1,034 at the end of year-3. net sales revenue (relating to the equipment): Year-1 $34,000; Year-2 $28,000 and Year-3 $23,000; applicable tax rate is 30%; and the required rate of return is 12%. If the depreciation rate is 25% under the straight-line method, calculate the tax amount in the third year relating to the sale of the equipment only.
The following information relating to an investment in PPE has been extracted from the books of Vandelay Industries Ltd: Total purchase price $59,993; salvage value $1,034 at the end of year-3. net sales revenue (relating to the equipment): Year-1 $34,000; Year-2 $28,000 and Year-3 $23,000; applicable tax rate is 30%; and the required rate of return is 12%. If the depreciation rate is 25% under the straight-line method, calculate the tax amount in the third year relating to the sale of the equipment only.
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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The following information relating to an investment in PPE has been extracted from the books of Vandelay Industries Ltd:
Total purchase price $59,993; salvage value $1,034 at the end of year-3. net sales revenue (relating to the equipment): Year-1 $34,000; Year-2 $28,000 and Year-3 $23,000; applicable tax rate is 30%; and the required
If the
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