Troy Industries purchased a new machine 3 years ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the percentages given in Table 4.2. Assume a 40% tax rate. a. What is the book value of the machine?
Troy Industries purchased a new machine 3 years ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the percentages given in Table 4.2. Assume a 40% tax rate. a. What is the book value of the machine?
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
Related questions
Concept explainers
Question
Urgent please
Transcribed Image Text:Troy Industries purchased a new machine 3 years ago
for $80,000. It is being depreciated under MACRS with
a 5-year recovery period using the percentages given
in Table 4.2. Assume a 40% tax rate.
a. What is the book value of the machine?
b. Calculate the firm's tax liability if it sold the machine
for each of the following amounts: $100,000; $56,000;
$23,200; and$15,000.
Rounded Depreciation Percentages by Recovery Year Using MACRS for
First Four Property Classes
TABLE 4.2
Percentage by recovery year
5 ycars
Recovery year
3 ycars
7 years
10 ycars
1
33%
20%
14%
10%
45
32
25
18
3
15
19
18
14
12
12
12
12
9.
8.
7
9.
8.
4
9.
6.
10
6.
11
4
Totals
100%
100%
100%
100%
These percentages have been rounded to the nearest whole percent to simplify calculations while retaining
realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded
percentages or directly apply double-declining balance depreciation using the half-year convention.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education