Please don't use Ai solution You have purchased a machine for $192,572 and are depreciating it using a five-year MACRSschedule (20%, 32%, 19.2%, 11.52%, 11.52%. 5.76%). You are in a 26% tax bracket and will be ableto sell the machine for $71,470 at the end of year four. Calculate your net incremental cash flow fromthe sale of this machine. (Round answer to nearest dollar)

The question requires the determination of the incremental cash flow for the sale of a machinery.…

Answered: You have purchased a machine 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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You purchased a machine for $1.17 million three years ago and have been applying straight-line depreciation to zero for a seven-year life. Your tax rate is 25%. If you sell the machine today (after three years of depreciation) for $ 765,000, what is your incremental cash flow from selling the machine?
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A property could be sold today for $2 million. It has a loan balance of $1 million and, if sold, the investor would incur a capital gains tax of $250,000. The investor has determined that if it were sold today, she would earn an IRR of 15 percent on equity for the past five years. If not sold, the property is expected to produce an after-tax cash flow of $50,000 over the next year. At the end of the year, the property value is expected to increase to $2.1 million, the loan balance will decrease to $900,000, and the amount of capital gains tax due is expected to increase to $255,000.a. What is the marginal rate of return for keeping the property one additional year?b. What advice would you give the investor?
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Last year you purchased a machine for $1M. You want to sell it today for $0.8M and replace it with a new machine that costs $1.2M. Both machines are classified as 20-year property (with depreciation rates of 5% and 9.5% in the first two years). The replacement will increase EBITDA by $100,0000. What are the cash flows at the time of replacement? The tax rate is 35%. Group of answer choices -$452,000 -$400,000 -$152,500 -$347,500 -$300,000
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