XYZ is evaluating a project that would require the purchase of a piece of equipment for $580,000 today. During year 1, the project is expected to have relevant revenue of $756,000, relevant costs of $199,000, andrelevant depreciation of $136,000. XYZ would need to borrow $580,000 today to pay for the equipment and would need to make an interest payment of $30,000 to the bank in 1 year. Relevant net income for theproject in year 1 is expected to be $322,000. What is the tax rate expected to be in year 1?A rate equal to or greater than 19.95% but less than 24.42%A rate equal to or greater than 28.03% but less than 37.53%A rate equal to or greater than 37.53% but less than 51.10%A rate equal to or greater than 24.42% but less than 28.03%A rate less than 19.95% or a rate greater than 51.10%

Net income is amount available after the deduction of the cost of goods sold , depreciation and…

Z is evaluating a project that would require the purchase of a pie levant depreciation of $136,000. XYZ would need to borrow $580 oject in year 1 is expected to be $322,000. What is the tax rate ex A rate equal to or greater than 19.95% but less than 24.42% A rate equal to or greater than 28.03% but less than 37.53%

Z is evaluating a project that would require the purchase of a pie levant depreciation of $136,000. XYZ would need to borrow $580 oject in year 1 is expected to be $322,000. What is the tax rate ex A rate equal to or greater than 19.95% but less than 24.42% A rate equal to or greater than 28.03% but less than 37.53%

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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Oberon Corp is considering a project with annual depreciation tax shield of 432,600. The company's tax rate is 20.5%. Depreciation expense is closest to: O A. $547,795. B. $776,517. C. $2,110,244.
Consider an asset that costs $528,000 and is depreciated straight-line to zero over its 6-year tax life. The asset is to be used in a 3-year project; at the end of the project, the asset can be sold for $66,000. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset? $115,038.00 $104,082.00 $109,560.00 $51,480.00 $429,012.00
Mf1. Consider an asset that costs $492,800 and is depreciated straight-line to zero over its 6-year tax life. The asset is to be used in a 2-year project; at the end of the project, the asset can be sold for $61,600. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset?
A two-year project has sales of $582,960, cash costs of $411,015, and depreciation expense of $68,109. The tax rate is 24 percent and the discount rate is 12 percent. What is the amount of the annual depreciation tax shield? O $23,606.67 O $16,346.16 O $47,213.34 O $26,210.01 A Moving to another question will save this response. Question 12 of 30
Please solve it as soon as possible! . Consider an asset with an initial cost of $100,000 and no salvage value. Compute the difference in the present value of the tax shields if CCA is calculated at 20% declining balance compared to if CCA is calculated using a five-year, straight line write off. For your calculation use 30% as the tax rate and 16% as the required return. (The half-year rule applies.) The difference, to the nearest dollar, is A S1.724 B $4,129 C S4.483 d. 59,517 e.$49,969
Consider an asset that costs $635,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $105,000. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Aftertax salvage value I.
A 21%-tax bracket firm (Lessee) is considering the use, for two years, of a truck that costs $150,000 today. This firm can buy the asset or lease it from another 21%-tax bracket firm (Lessor) in exchange for $50,000 per year, with the first payment due at the time of signing. What is the Lessee's Time 0 incremental cash flow of buying the asset instead of leasing it?
Baghiben
How to calculate the answer of Tax Allowable depreciation?
Problem #4: Capital Budgets Rambus Inc. would like to purchase a production machine for $325,000. The machine is expected to have a life of three years, and a salvage value of $50,000. Annual maintenance costs will total $12,500. Annual savings are predicted to be $112,500. The company's required rate of return is 12%. Factors: Present Value of $1 (r = 12%) Year 0 1.0000 Year 1 0.8929 Year 2 0.7972 Year 3 0.7118
5. Koral Corporation can invest in a project that costs $400,000. The projectisexpectedtohaveanafter-taxreturnof$250,000ineachof years 1 and 2. Koral normally uses a 10 percent discount rate to evaluate projects but feels it should use 12 percent to compensate for inflation.Howmuchdifferencedoestheratemakeintheafter-taxnet present value of the project? a. S50,000 b. $22,500 c. $20,000 d. S11,250
Baghiben

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