None You purchased a machine for $1.02million three years ago and have beenapplying straight-line depreciation tozero for a seven-year life. Your tax rateis 40%. If you sell the machine today(after three years of depreciation) for$731,000, what is your incremental cashflow from selling the machine?

To calculate the incremental cash flow from selling the machine.1. Calculate the annual…

Answered: You purchased a machine for $1.02…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 9P

See similar textbooks

Similar questions

You purchased a warehouse eight years ago for P3.5M. Since then you had rented it out for P240,000.00 per year, incurring P55,000.00 per year for repairs and maintenance. Five years ago you spent P250,000.00 for roof replacement and you increased the annual rent to P300,000.00 the succeeding year. If you decide to sell the warehouse for P5.4M to a willing buyer now, evaluate your investment using future worth analysis and a 12.5% rate of return. Ans: -P1,328.417.25
You can buy a piece of vacant land for $40,000 cash. You plan to hold it for 20 years and then sell it at a profit. During this period, you would pay annual property taxes of $815. You would have no income from the property. (a) Assuming that you want an 8% rate of return, at what net price would you have to sell the land 20 years hence? (b) What is open space conservation and why is it important? What options would you have in selling your property with this in mind?
A holiday trailer depreciates in value between 10% to 15% per year. If your family purchases a holiday trailer for $29,000.00 and they plan on selling it in 4 year, what is the most that they could expect to sell it for if these depreciation percentages are correct?
Your company wants to purchase a photostat machine which costsRM15,000. It will be obsolete in 5 years. Your options are to borrow the moneyat 10 percent or to lease the machine. If you lease the payment will beRM2,500 per year, payable at the end of each of the next five years. If youpurchase the machine it will depreciate at a straight-line basis. The tax rate is34 percent. Prepare a table and calculate to justify whether you should leaseor buy.
Sally Seashell bought a lot at the Salty Sea for $50,000 cash. She does not plan to build on the lot, but instead will hold it as an investment for 25 years. She wants a 10% after-tax rate of return after taking the 6% annual inflation rate into account. If income taxes amount to 15% of the capital gain, at what price must she sell the lot at the end of the 10 years?
You have an opportunity to purchase a piece of vacant land for $30,000 cash. If you plan to hold it for 15 years and then sell it at a profit. During this period, you would have to pay annual property taxes of $600 and have no income from the property. Assuming that you would want a 10% rate of return from the investment, a) Draw a cashflow diagram. b) What net price would you have to sell it in the next 15 years?
You can buy a piece of land today that you except will be worth $15000 in 9 years. Assuming your money is worth 9%, how much would you be willing to pay for the property?
What should you do if you own a piece of land that you bought 5 years ago for $50,000. The tax rate is 30% and you can assume you have sufficient other income to take advantage of all tax effects. Your after-tax discount rate is 7%.a. You can sell the land today for $200,000. b. You believe the land will be worth $275,000 in five years because you expect a new shopping center to be built next to your land, so You can wait and sell the land at that time (in 5 years).
You are trying to evaluate the feasibility of purchasing a land. You plan to rent the plot of land to receive after-tax receipts of $2,500 per month. You are hoping to sell the land in the next ten years to receive after-tax proceeds of US$2.0 million to purchase a building containing at least four apartments. Assume the funds for purchasing the apartment will be drawn from your savings account which is currently earning 2% after taxes and that inflation rate is currently 5%. a) Identify the cash flows, their timing and the required rate of return applicable to calculating the maximum value you should pay for the land. b) Showing all calculations state if you should purchase the land for $1.6 million, justify your decision. What is the maximum price you should pay to acquire the single dwelling unit?
Yang is considering buying an asset that, starting 5 years from now, will pay $10,000 per year forever. Assume that the required return is 7.25%. What is the most Yang should pay for this asset?
If you receive an inheritance of $10,000 today, how long do you have to invest it at 8% per year to be able to withdraw $2000 every year forever? Assume the 8% per year is a return that you can depend on forever.
The owner of a pizza restaurant needs to buy a new pizza oven for the restaurant. The oven costs $450, is expected to last 5 years, and will be depreciated using the straight line method. If the total cash inflows from the new oven are constant at $750 for the next 5 years, and the total cash outflows are constant at $380 for the next 5 years, determine the cash flow for the pizza restaurant in the second year assuming the tax rate is 34%. $ Place your answer in dollars and cents.

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

SEE MORE TEXTBOOKS