MACRS stands for modified accelerated cost recovery system. Life of the asset will be classified as per the internal revenue code. Three years MACRS rates, Year 1: 33.33%, Year 2: 44.45%, Year 3: 14.81% and Year 4: 7.41%. CWC bought machine that is expected to generate $25,000 in operating income before depreciation expenses each year. The cost of machine is $600,000 falls under three years MACRS class.

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Answer 1

Question

Chapter 10, Problem 1PROB

Summary Introduction

MACRS stands for modified accelerated cost recovery system. Life of the asset will be classified as per the internal revenue code.

Three years MACRS rates, Year 1: 33.33%, Year 2: 44.45%, Year 3: 14.81% and Year 4: 7.41%.

CWC bought machine that is expected to generate $25,000 in operating income before depreciation expenses each year. The cost of machine is $600,000 falls under three years MACRS class.

Expert Solution & Answer

Explanation of Solution

a.

Calculate the after tax operating income as follows:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 1

Formulas:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 2

b.

Calculate the operating cash flows for year 1 as follows:

Operating cashflows=After tax operating income+Depreciation =−$ 1,002.00+$ 26,670.00=$ 25,668.00

Therefore, the operating cash flows in year 1 is $ 25,668.00.

Calculate the operating cash flows for year 2 as follows:

Operating cashflows=After tax operating income+Depreciation =$ 9,668.40+$ 8,886.00=$ 18,554.40

Therefore, the operating cash flows in year 2 is $ 18,554.40.

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Answer 2

Question

Chapter 10, Problem 1PROB

Summary Introduction

MACRS stands for modified accelerated cost recovery system. Life of the asset will be classified as per the internal revenue code.

Three years MACRS rates, Year 1: 33.33%, Year 2: 44.45%, Year 3: 14.81% and Year 4: 7.41%.

CWC bought machine that is expected to generate $25,000 in operating income before depreciation expenses each year. The cost of machine is $600,000 falls under three years MACRS class.

Expert Solution & Answer

Explanation of Solution

a.

Calculate the after tax operating income as follows:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 1

Formulas:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 2

b.

Calculate the operating cash flows for year 1 as follows:

Operating cashflows=After tax operating income+Depreciation =−$ 1,002.00+$ 26,670.00=$ 25,668.00

Therefore, the operating cash flows in year 1 is $ 25,668.00.

Calculate the operating cash flows for year 2 as follows:

Operating cashflows=After tax operating income+Depreciation =$ 9,668.40+$ 8,886.00=$ 18,554.40

Therefore, the operating cash flows in year 2 is $ 18,554.40.

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Answer 3

Question

Chapter 10, Problem 1PROB

Summary Introduction

MACRS stands for modified accelerated cost recovery system. Life of the asset will be classified as per the internal revenue code.

Three years MACRS rates, Year 1: 33.33%, Year 2: 44.45%, Year 3: 14.81% and Year 4: 7.41%.

CWC bought machine that is expected to generate $25,000 in operating income before depreciation expenses each year. The cost of machine is $600,000 falls under three years MACRS class.

Expert Solution & Answer

Explanation of Solution

a.

Calculate the after tax operating income as follows:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 1

Formulas:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 2

b.

Calculate the operating cash flows for year 1 as follows:

Operating cashflows=After tax operating income+Depreciation =−$ 1,002.00+$ 26,670.00=$ 25,668.00

Therefore, the operating cash flows in year 1 is $ 25,668.00.

Calculate the operating cash flows for year 2 as follows:

Operating cashflows=After tax operating income+Depreciation =$ 9,668.40+$ 8,886.00=$ 18,554.40

Therefore, the operating cash flows in year 2 is $ 18,554.40.

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Answer 4

Question

Chapter 10, Problem 1PROB

Summary Introduction

MACRS stands for modified accelerated cost recovery system. Life of the asset will be classified as per the internal revenue code.

Three years MACRS rates, Year 1: 33.33%, Year 2: 44.45%, Year 3: 14.81% and Year 4: 7.41%.

CWC bought machine that is expected to generate $25,000 in operating income before depreciation expenses each year. The cost of machine is $600,000 falls under three years MACRS class.

Expert Solution & Answer

Explanation of Solution

a.

Calculate the after tax operating income as follows:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 1

Formulas:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 2

b.

Calculate the operating cash flows for year 1 as follows:

Operating cashflows=After tax operating income+Depreciation =−$ 1,002.00+$ 26,670.00=$ 25,668.00

Therefore, the operating cash flows in year 1 is $ 25,668.00.

Calculate the operating cash flows for year 2 as follows:

Operating cashflows=After tax operating income+Depreciation =$ 9,668.40+$ 8,886.00=$ 18,554.40

Therefore, the operating cash flows in year 2 is $ 18,554.40.

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Answer 5

Chapter 10, Problem 1PROB

Summary Introduction

MACRS stands for modified accelerated cost recovery system. Life of the asset will be classified as per the internal revenue code.

Three years MACRS rates, Year 1: 33.33%, Year 2: 44.45%, Year 3: 14.81% and Year 4: 7.41%.

CWC bought machine that is expected to generate $25,000 in operating income before depreciation expenses each year. The cost of machine is $600,000 falls under three years MACRS class.

Expert Solution & Answer

Explanation of Solution

a.

Calculate the after tax operating income as follows:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 1

Formulas:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 2

b.

Calculate the operating cash flows for year 1 as follows:

Operating cashflows=After tax operating income+Depreciation =−$ 1,002.00+$ 26,670.00=$ 25,668.00

Therefore, the operating cash flows in year 1 is $ 25,668.00.

Calculate the operating cash flows for year 2 as follows:

Operating cashflows=After tax operating income+Depreciation =$ 9,668.40+$ 8,886.00=$ 18,554.40

Therefore, the operating cash flows in year 2 is $ 18,554.40.

Answer 6

Chapter 10, Problem 1PROB

Summary Introduction

MACRS stands for modified accelerated cost recovery system. Life of the asset will be classified as per the internal revenue code.

Three years MACRS rates, Year 1: 33.33%, Year 2: 44.45%, Year 3: 14.81% and Year 4: 7.41%.

CWC bought machine that is expected to generate $25,000 in operating income before depreciation expenses each year. The cost of machine is $600,000 falls under three years MACRS class.

Expert Solution & Answer

Explanation of Solution

a.

Calculate the after tax operating income as follows:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 1

Formulas:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 2

b.

Calculate the operating cash flows for year 1 as follows:

Operating cashflows=After tax operating income+Depreciation =−$ 1,002.00+$ 26,670.00=$ 25,668.00

Therefore, the operating cash flows in year 1 is $ 25,668.00.

Calculate the operating cash flows for year 2 as follows:

Operating cashflows=After tax operating income+Depreciation =$ 9,668.40+$ 8,886.00=$ 18,554.40

Therefore, the operating cash flows in year 2 is $ 18,554.40.

Answer 7

Chapter 10, Problem 1PROB

Summary Introduction

MACRS stands for modified accelerated cost recovery system. Life of the asset will be classified as per the internal revenue code.

Three years MACRS rates, Year 1: 33.33%, Year 2: 44.45%, Year 3: 14.81% and Year 4: 7.41%.

CWC bought machine that is expected to generate $25,000 in operating income before depreciation expenses each year. The cost of machine is $600,000 falls under three years MACRS class.

Answer 8

Expert Solution & Answer

Explanation of Solution

a.

Calculate the after tax operating income as follows:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 1

Formulas:

CFIN, Chapter 10, Problem 1PROB , additional homework tip 2

b.

Calculate the operating cash flows for year 1 as follows:

Operating cashflows=After tax operating income+Depreciation =−$ 1,002.00+$ 26,670.00=$ 25,668.00

Therefore, the operating cash flows in year 1 is $ 25,668.00.

Calculate the operating cash flows for year 2 as follows:

Operating cashflows=After tax operating income+Depreciation =$ 9,668.40+$ 8,886.00=$ 18,554.40

Therefore, the operating cash flows in year 2 is $ 18,554.40.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 10 - Prob. 1PROB Ch. 10 - Prob. 2PROB Ch. 10 - Prob. 3PROB Ch. 10 - Prob. 4PROB Ch. 10 - Prob. 5PROB Ch. 10 - Prob. 6PROB Ch. 10 - Prob. 7PROB Ch. 10 - Prob. 8PROB Ch. 10 - Prob. 9PROB Ch. 10 - Prob. 10PROB

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