Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 10, Problem 10.4CTF
An asset costs $24,000 and is classified as three-year MACRS property. What is the
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Refer to Exhibit 12.4 in the text. What is the depreciation expense deduction in each of 4 years for a$10,000 asset classified under MACRS as 3-year property?
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Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.
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Chapter 10 Solutions
Fundamentals of Corporate Finance
Ch. 10.1 - What are the relevant incremental cash flows for...Ch. 10.1 - What is the stand-alone principle?Ch. 10.2 - Prob. 10.2ACQCh. 10.2 - Prob. 10.2BCQCh. 10.2 - Explain why interest paid is not a relevant cash...Ch. 10.3 - What is the definition of project operating cash...Ch. 10.3 - For the shark attractant project, why did we add...Ch. 10.4 - Prob. 10.4ACQCh. 10.4 - How is depreciation calculated for fixed assets...Ch. 10.5 - Prob. 10.5ACQ
Ch. 10.5 - Prob. 10.5BCQCh. 10.6 - Prob. 10.6ACQCh. 10.6 - Under what circumstances do we have to worry about...Ch. 10 - Prob. 10.1CTFCh. 10 - What should NOT be included as an incremental cash...Ch. 10 - Prob. 10.3CTFCh. 10 - An asset costs 24,000 and is classified as...Ch. 10 - Prob. 10.5CTFCh. 10 - Prob. 10.6CTFCh. 10 - Opportunity Cost [LO1] In the context of capital...Ch. 10 - Depreciation [LO1] Given the choice, would a firm...Ch. 10 - Net Working Capital [LO1] In our capital budgeting...Ch. 10 - Stand-Alone Principle [LO1] Suppose a financial...Ch. 10 - Prob. 5CRCTCh. 10 - Cash Flow and Depreciation [LOI] When evaluating...Ch. 10 - Capital Budgeting Considerations [LOI] A major...Ch. 10 - Prob. 8CRCTCh. 10 - Prob. 9CRCTCh. 10 - Prob. 10CRCTCh. 10 - Relevant Cash Flows [LO1] Parker Slone, Inc., is...Ch. 10 - Prob. 2QPCh. 10 - Calculating Projected Net Income [LO1] A proposed...Ch. 10 - Calculating OCF [LO1] Consider the following...Ch. 10 - OCF from Several Approaches [LO1] A proposed new...Ch. 10 - Calculating Depreciation [LO1] A piece of newly...Ch. 10 - Calculating Salvage Value [LO1] Consider an asset...Ch. 10 - Calculating Salvage Value [LO1] An asset used in a...Ch. 10 - Calculating Project OCF [LO1] Quad Enterprises is...Ch. 10 - Calculating Project NPV [LO1] In the previous...Ch. 10 - Prob. 11QPCh. 10 - NPV and Modified ACRS [LO1] In the previous...Ch. 10 - Project Evaluation [LO1] Dog Up! Franks is looking...Ch. 10 - Project Evaluation [LO1] Your firm is...Ch. 10 - Prob. 15QPCh. 10 - Calculating EAC [LO4] A five-year project has an...Ch. 10 - Calculating EAC [LO4] You are evaluating two...Ch. 10 - Calculating a Bid Price [LO3] Romo Enterprises...Ch. 10 - Cost-Cutting Proposals [LO2] Warmack Machine Shop...Ch. 10 - Comparing Mutually Exclusive Projects [LO1] Lang...Ch. 10 - Prob. 21QPCh. 10 - Prob. 22QPCh. 10 - Prob. 23QPCh. 10 - Comparing Mutually Exclusive Projects [LO4]...Ch. 10 - Equivalent Annual Cost [LO4] Compact fluorescent...Ch. 10 - Break-Even Cost [LO2] The previous problem...Ch. 10 - Break-Even Replacement [LO2] The previous two...Ch. 10 - Issues in Capital Budgeting [LO1] The debate...Ch. 10 - Replacement Decisions [LO2] Your small remodeling...Ch. 10 - Replacement Decisions [LO2] In the previous...Ch. 10 - Calculating Project NPV [LO1] You have been hired...Ch. 10 - Prob. 32QPCh. 10 - Calculating Required Savings [LO2] A proposed...Ch. 10 - Prob. 34QPCh. 10 - Calculating a Bid Price [LO3] Your company has...Ch. 10 - Replacement Decisions [LO2] Suppose we are...Ch. 10 - Conch Republic Electronics, Part 1 Conch Republic...Ch. 10 - Conch Republic Electronics, Part 1 Conch Republic...Ch. 10 - Conch Republic Electronics, Part 1 Conch Republic...Ch. 10 - Conch Republic Electronics, Part 1 Conch Republic...
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- A project requires $55,265 of equipment that is classified as a 7-year property. What is the depreciation expense in Year 4 given the following MACRS depreciation allowances, starting with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent? Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.arrow_forwardA taxpayer wants to place in service a $10,000 asset that is assigned to the five-year class. Compute the MACRS percentages and the depreciation amounts for the asset. Given: Five-year asset, half-year convention, \alpha =40% and S=0 Find: MACRS depreciation percentages Dn for $10,000 asset.arrow_forwardA tractor for over-the-road hauling is purchased for $90,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $4,000. Calculate the depreciation deduction and the unrecovered investment during each year of the tractor’s life using MACRS-GDS allowances. a. What is the MACRS-GDS property class? b. Assume the tractor is used for the full 6 years. c. Assume the tractor is sold during the 4th year of use. d. Assume the tractor is sold during the 3rd year of use.arrow_forward
- A tractor for over-the-road hauling is purchased for $90,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $4,000. Calculate the depreciation deduction and the unrecovered investment during each year of the tractor's life using MACRS-GDS allowances. a. What is the MACRS-GDS property class? ANSWER b. Assume the tractor is used for the full 6 years ANSWER of use. c. Assume the tractor is sold during the 4th year ANSWER d. Assume the tractor is sold during the 3rd year of use.arrow_forwardA piece of construction equipment (asset class 15.0) was purchased by the Jones Construction Company. The cost basis was $300,000. Solve, a. Determine the GDS and ADS depreciation deductions for this property. b. Compute the difference in PW of the two sets of depreciation deductions in Part (a) if i = 12% per year.arrow_forwardThe Counting House, Inc., purchased 5-year property class equipment for $60,000. It uses theDiminishing Balance method(20%) of depreciation. What is depreciation for the second year of the asset'slife?arrow_forward
- Electric generating and transmission equipment is placed in service at a cost of $3,000,000. It is expected to last 30 years with a salvage value of $250,000.a. What is the MACRS-GDS property class? b. Determine the depreciation deduction and the unrecovered investment during each of the first 4 tax years.arrow_forwardConsider a five-year MACRS asset purchasedat $80,000. (Note that a five-year MACRS propertyclass is depreciated over six years due to the half-yearconvention. The applicable salvage values would be$40,000 in year 3, $30,000 in year 5, and $10,000 inyear 6.) Compute the gain or loss amounts when theasset is disposed of in(a) Year 3.(b) Year 5.(c) Year 6arrow_forwardIf the book value of an asset is $12,500 and the accumulated depreciation is $3,500, the original cost of the asset isarrow_forward
- Consider a 5-year MACRS property asset with an installed and “made ready for use” cost basis of $100. (Note: The $100 value used here is for illustration purposes in developing the rates. One would not depreciate an asset with a cost basis of only $100.) Develop the MACRS percentage rates (rt) for the asset based on the underlying depreciation methods.arrow_forwardA 7 year property class asset was purchased for $115,000. The owner took depreciation charges using MACRS each year. The asset was sold at a market value of $122,200 at the end of the third year. The book value at the end of the third year? i. $70,400 ii. $65,087 iii. $50,290 iv. $43,446 v. $35,900 Please use excel and show formulas.arrow_forwardA farm tractor costing $80,000 is depreciated using the MACRS method. The tractor qualifies as a 3-year property, has a scrap value of $20,000, and is depreciated at the following rates: Year 1, 33.33%; Year 2, 44.45%; Year 3, 14.81%; and Year 4, 7.41%. The amount of depreciation to be entered for the second year would be a.$44,450. b.$20,000. c.$35,560. d.$26,670.arrow_forward
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