Get the Correct option with calculation and explanation Your firm purchased machinery with a 7-year MACRS lifefor $10.8 million. The project, however, will end after 4years. If the equipment can be sold for $5.3 million at thecompletion of the project, and your firm's tax rate is 30%,what is the after-tax cash flow from the sale of themachinery? Use MACRS depreciation schedule. (Enter theanswer in millions rounded to 4 decimal places.)

The problem requires the determination of the after-tax cash flows of the sale of machinery. In…

Answered: Your firm purchased machinery with a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
Need Answer of this Question
Your firm purchased machinery for $9.5 million and received immediate 100% bonus depreciation. The project will end after 5 years. If the equipment can be sold for $4.0 million at the completion of the project, and your firm's tax rate is 21%, what is the after-tax cash flow from the sale of the machinery? Note: Enter your answer in millions rounded to 4 decimal places. After-tax cash flow millions
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
Riverton Silver is considering buying a new extraction system. The new extraction system would be purchased today for $56,300.00. It would be depreciated straight-line to $0 over 2 years. In 2 years, the extraction system would be sold for an after-tax cash flow of $3,060.00. Without the extraction system, costs are expected to be $97,800.00 in 1 year and $124,000.00 in 2 years. With the extraction system, costs are expected to be $75,000.00 in 1 year and $36,700.00 in 2 years. If the tax rate is 48.00% and the cost of capital is 18.71%, what is the net present value of the new extraction system project? -$1,764.29 (plus or minus $10) $9,043.41 (plus or minus $10) -$749.34 (plus or minus $10) -$16,928.65 (plus or minus $10) None of the above is within $10 of the correct answer
A milling machine costing $18,000 will be depreciated using 7-year MACRS. The machine will be sold at the end of year 8 for $1000. The combined tax rate is 25%, and the MARR is 10%. What is the present worth of the after-tax cash flows? Submit your spreadsheet. Answer to the nearest whole dollar without the $ sign.
If the depreciation tax shield is 40,000 due to tax rate declaration of 20%, what is the price of the machine if it has an expected life of 20 years and the money is worth 13% compounded annually? 1. Depreciation: (4 decimal places only) 2. Price: (3 decimal places)
The Wet Corporation has an investment project that will reduce expenses by $30,000 per year for 3 years. The project's cost is $30,000. If the asset is part of the 3 year MACRS category (33.33% first year depreciation) and the company's combined tax rate is 29%, what is the cash flow from the project in year 1? Note: Do not round intermediate calculations. Round your answer to the nearest dollar amount. Multiple Choice $23,650 $24.980 $24.200 $25,660
Baird Bros. Construction is considering the purchase of a machine at a cost of $202,000. The machine is expected to generate cash flows of $37,000 per year for 10 years and can be sold at the end of 10 years for $27,000. Interest is at 11%. Assume the machine purchase would be paid for on the first day of year one, but that all other cash flows occur at the end of the year. Ignore income tax considerations. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:a. What is the net present value of the cash flows?b. Determine whether Baird should purchase the machine.
NUBD Co. purchase a machine for P180,000, which will be depreciated on the straight-line basis over a five year period with no salvage value. The related cash flow from operations, net of income taxes, is expected to be P40,000, a year. Assume that NUBD’s effective income tax rate is 40% for all years.What is the payback period?
Consider a machine that costs P20,000 and has a five years useful life. At the end of the five years, it can be sold for P4,000 after tax adjustment. The annual operating and maintenance (O&M) costs are about P500. If the firm could earn an after-tax revenue of P5,000 per year with this machine, should it be purchased at an interest rate of 10%?
A 3-year project requires the purchase of a machine (fixed asset) for $6,000 in Year 0. In Year 2, the project is expected to have net income of $2,000 and the depreciation rate is 45%. The tax rate is 35%. There is no interest expense. What is the Operating Cash Flow in Year 2? Enter your answer without the dollar sign and round your final answer to the nearest whole number (nearest dollar).

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

SEE MORE TEXTBOOKS