Your firm needs a computerized machine tool lathe which costs $55,000 and requires $12,500 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 13 percent. Calculate the depreciation tax shield for this project in year 3. (Round your answer to 2 decimal places.) Depreciation tax shield?______

Q: llana Industries, Inc., needs a new lathe. It can buy a new high-speed lathe for $0.91 million. The…

A: Net present value is the difference between the present value of cash flows and the present value of…

Q: A new machine costs $764,850 and falls in a 25.50% CCA class. The machine will have zero value…

A: Given: Particulars Amount Machine cost $764,850 CCA rate 25.50% LIFE 5 Savings $355,360…

Q: Your firm needs a computerized machine tool lathe which costs $80,000, will generate $50,000…

A: Step 1: analyze first the problem.. Step 2: depreciation methods are. Straight line method, double…

Q: Ilana Industries Incorporated needs a new lathe. It can buy a new high-speed lathe for $1.1 million.…

A: Net present value is the most important capital budgeting methods used and is based time value of…

Q: Daily Enterprises is purchasing a $8,000,000 machine. The machine will be depreciated using…

A: Cash flows: It represents the net amount of cash that is moving in and moving out of the firm. The…

Q: Daily Enterprises is purchasing a $10.58 million machine. It will cost $74,461.00 to transport and…

A: Net present value (NPV) is the difference  between present value of all cash inflows and initial…

Q: Madison Manufacturing is considering a new machine that costs $350,000 and would reduce pre-tax…

A: To better understand the computations, let's go over each step in greater detail: First, figure out…

Q: Florida Car Wash is considering a new project whose data are shown below. The equipment to be used…

A: Net present value is  a technique used to select a better investment project from a given set of…

Q: This project will require an investment of $20,000 in new equipment. Under the new tax law, the…

A: Given information: Initial investment : $20,000 Tax rate : 25% WACC (cost of capital) : 11% Under…

Q: Sunrise Furniture Inc. wants to upgrade the existing production process. The cost-cutting project…

A: Depreciation is a non-cash expense. Although it is excluded while computing cashflows for capital…

Q: Dave's Demolitions Inc. is considering purchasing $697,400 of equipment for a four- year project.…

A: Salvage Value net of tax refers to the sale value of the he equipment or the project after the…

Q: Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost…

A: Every item that a business will be recording as declining on its books over time can have an…

Q: Foley Systems is considering a new project whose data are shown below. Under the new tax law, the…

A: To find the NPVStep 1: Calculate the Operating Cash FlowOperating Cash Flow = Sales less Costs less…

Q: Your firm needs a machine which costs $280,000, and requires $43,000 in maintenance for each year of…

A: After Tax salvage value is that amount which is received by the investor from selling the assets…

Q: Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost…

A: Salvage value refers to the residual value, that is, the value at which the equipment can be traded…

Q: Elder, Inc. is considering the purchase of a new air-handling system that will have no effect on…

A: Savings means the amount which a firm earns by installing a new plant or project. The project which…

Q: Celtic Inc. is considering a 16-year project that will generate before tax cash flow of $18, 000 per…

A: Step-1

Q: 23,300 in labour costs, and will be useful for 9 years. Suppose that for tax purposes, the lathe…

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

Q: A special power tool for plastic products costs $400,000 and has a four-year useful life, no salvage…

A: The period in which the cost of asset including working capital investment is fully recovered from…

Q: Fort requires equipment costing $320,000.  It is a  9-year project, and is depreciated straight line…

A: cost of equipment= $320,000 life span of the project= 9 years  Sales generated= $189,000  cost=…

Q: Consider an asset that costs $176,000 and is depreciated straight-line to zero over its 10- year tax…

A: Cost of asset = $176,000 depreciationmethod is straight line methodlife of the asset is 10 years.But…

Q: The Jackson Company has the opportunity to invest in one of two mutually exclusive machines that…

A: YearsMachine AMachine…

Q: are considering investing in a piece of equipment to mplement a cost-cutting proposal. The pre-tax…

A: PI index is profitability index and calculated as the ratio of present value of cash flow and…

Q: Daily Enterprises is purchasing a $14,000,000 machine. The machine will depreciated using…

A: The objective of the question is to calculate the annual cash flow for Daily Enterprises from the…

Q: Blue Sky Ltd. is considering the replacement of one of its older machines that is still capable of…

A: New Machine = 150000 Annual operating cost = 50000 Tax Rate = 28%

Q: Your firm needs a computerized tool lathe which cost $49000 and requires $119000 in maintenance for…

A: Given information: Cost of computerized tool is $49,000 Maintenance cost is $119,000 Tax rate is 34%…

Q: The Lumber Yard is considering adding a new product line that is expected to increase annual sales…

A: Depreciation is the decrease in the value of fixed assets. The cost of the fixed assets is allocated…

Q: Florida Car Wash is considering a new project whose data are shown below. The equipment to be used…

A: Net Present Value NPV is the technique of capital budgeting used to evaluate the profitability and…

Q: Foley Systems is considering a new project whose data are shown below. Under the new tax law, the…

A: NPV is the difference between present value(pv) of all cash inflows and initial investment NPV =PV…

Q: Isle Royale Solutions is considering a project that would have a eight-year life and would require a…

A: As stated:A $2,904,000 initial investmentb) For eight years, the annual net operating income was…

Q: Consider an asset that costs $601,119 and is depreciated straight-line to zero over its 10-year tax…

A: After tax cash flow from asset is the cash received on the sale of an asset after adjustment for the…

Q: your company is considering a new project that will require $10,000 of new equipment at the start of…

A: Annual depreciation =(Cost-Salvage value)/Useful Life =(10000-3000)/5 =$1400/year

Q: Consider an asset that costs $1,156,294 and is depreciated straight-line to zero over its 10-year…

A: Formula. Depreciation per year =( cost - salvage value) ÷ useful life.

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.