what is the present value of the capital allowance tax benefits (to the nearest £1,000)

Q: A company is considering an investment of €50.000 made at the beginning of the year for a period of…

A:

Q: Adidas bought a $36.4 million piece of equipment. It will be depreciated by $6.07 million per…

A: Depreciation is the decrease in value of equipment with time and use of equipment and depreciation…

Q: Assume zero taxes. Equipment can be leased at $10,000 per year (first payment one year hence) for…

A: Given, Equipment lease cost = $10,000 per year Purchase cost = $64,177 Weighted average cost of…

Q: An company uses a technology which it purchased for $15 million. Operating costs are $2 million per…

A: IRR stands for internal rate of return and refers to a method that is used for analyzing the…

Q: 4. A large corporation subjected to 35% tax is investing in a new income producing asset that is…

A: Internal Rate of Return: The discount rate that reduces a project's net present value to zero is…

Q: Larson is considering the purchase of manufacturing equipment categorized under the 5-year MACRS…

A: 1. Payback Period:  The payback period indicates how long it takes for Larson to recover the initial…

Q: Suppose you sell a fixed asset for $111,000 when its book value is $131,000. If your company's…

A: Given information: Book Value = $131,000 Sale value =  $111,000  Tax rate = 40% or 0.40 Required:…

Q: mpany purchases the machine, its cost of $276,000 will be financed with a loan at 14.8% interest for…

A: The equipment finance company pays the loan in equal installments which include the principal amount…

Q: any, whose earnings put them in the 46% tax bracket, is considering purchasing a piece of equipment…

A: Net present value is main capital budgeting method used based on time value of money and it must be…

Q: 5) Pisces Corporation is planning to buy a machine for $20,000 that may run for 4 years (probability…

A: We can incorporate risk in capital budgeting decision by developing a probability distribution of…

Q: Amsterdam Corporation produces medical grade isotopes. The isotopes are produced in a continuous…

A: Schedule showing calculation of Cost per Equivalent unit:       Total Cost  Direct Materials…

Q: A firm invests $10.70 million in a new stamping machine. It depreciates straight-line for tax…

A: It is a problem that requires the calculation of the present value of tax savings due to…

Q: A company has purchased a new piece of machinery for $100,000. The estimate it will result in annual…

A: Capital budgeting is the process of evaluating and selecting long-term investments that will benefit…

Q: In order to finance a new project, a company borrowed $4,000,000 at 8% per year with the stipulation…

A: a) Calculation of cost of debt before taxes

Q: Suppose you sell a fixed asset for $126,000 when it's book value is $157,000. If your company's…

A: The computation of after tax cash flow is as follows:Hence, the after tax cash flow is $136850.

Q: The company is considering investing R40million in equipment which will generate a net cas four…

A: Net present value is difference between the present value of cash flow and initial investment. The…

Q: XYZ Company is building an addition (building and machinery) to its manufacturing plant to increase…

A: Cost of the building additional manufacturing plant is $1,230,000 Loan to the company is equal to…

Q: A company is deciding whether to lease or buy new equipment. The equipment can be purchased for…

A: It is a case that deals with the capital cost allowance tax shield (CCATS). It is the tax advantage…

Q: Next Corporation needs a piece of equipment that costs $270 million. Next can either lease the…

A: Solution: Calculation of Present value of the Cash outflow under Purchase Option : Under purchase…

Q: An asset costing £20,000 is expected to last three years when it can be sold for £16,000. The tax…

A: Capital allowance on assets is also known as Depreciation expenses which is charged on assets every…

Q: A firm, whose cost of capital is 9 percent, may acquire equipment for $110,783 and rent it to…

A: Net Present Value (NPV) is a capital budgeting technique which uses a discount rate to bring all the…

Q: Concrete Corp plans on buying a new mixture at a cost of $150,000. The after tax benefit from this…

A: The question is related to Capital Budgeting. Internal Rate of Return is that rate at which Present…

Q: Your firm buys a new equipment for Rs. 80,000. It will give your firm annual savings of Rs. 27,000,…

A: To open the "IRR function" window - MS-Excel --> Formulas --> Financials --> IRR.

Q: 4 b) Your company wants to purchase a phtostat machine which costs RM15,000. It will be obsolee in 5…

A: Lease Option is that option under which buyer would pay the fixed amount every year against taking…

Q: Suppose that Sudbury Mechanical Drifters is proposing to invest $80 million in a new factory. It can…

A: Present Value of Depreciation Tax Shield = Annual Depreciation Tax shield * Present Value Annuity…

Q: A company is considering a £70,000 investment in a machine that would produce 10,000 items per year…

A: We first calculate the NPV  without using the salvage value then we will find the difference between…

Q: A man invests in a project that requires a fixed capital of P 2.5 M with no salvage, and life of 12…

A: Fixed Capital is of P2.5 million Life of project is 12 years Estmated maintenance cost is of…

Q: A machine could be purchased for £800,000; it would be used for 3 years and then sold for £580,000.…

A: NPV(Net present value) is a capital budgeting technique which is used when the company wants to…

Q: Proven Specialist will spend $850,000 on a piece of equipment that will manufacture fine wire for…

A: Net Investment Net Investment The net investment shows the amount of money that the company utilizes…

Q: A project will generate before tax cost savings of $110,000 per year, for five years, create…

A: When the company's accounts receivables. inventory and accounts payables are given the evaluator of…

Q: Charlie Corp. is purchasing new equipment with a cash cost of $100,000 for the assembly line. The…

A: Present value = $100,000Annuity = $22960Period = 6 years

Q: DO IT IN EXCEL, AND SHOW THE FORMULAS If the company purchases the machine, its cost of $276,000…

A: Principal is a value which is borrowed from external sources. It can be done in the form of cash or…

Q: Assume zero taxes. The Black Gold Oil Company can lease equipment at $10,000 per year (first payment…

A: Let's address the questions one by one:

Q: A company is considering a £70,000 investment in a machine that would produce 10,000 items per year…

A: Investment  £70,000.00 Salvage Value  £10,000.00 Time Period 3 Variable Cost 7 Selling price…

Q: A firm buys a piece of equipment for $115,866.00 and will straight-line depreciate it to zero over…

A: Annual depreciation=(Cost-Residual value)/Useful life=(115866/5)=$23173.2/yearAnnual tax…

Q: Suppose you sell a fixed asset for $312,000 when its book value is $102,000. If your company’s…

A: After-tax cash flow is the selling price less the tax paid on capital gain. Capital gain is the…

Q: Mojave Corporation was looking at an investment that would generate $5,000 in net income before…

A: WORKING NOTE  1) tax @21%(3000*21%)=630