What is the equipment after tax salvage value? Karsted Air Services is now in the final year of aproject. The equipment originally cost $24 million,of which 100% has been depreciated. Karsted cansell the used equipment today for $10 million, andits tax rate is 30%. What is the equipment's after-tax salvage value?

Let me do it step by step:1. Original cost = $24 million2. Book value = $0 because 100% has been…

Answered: Karsted Air Services is now in the…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 18E

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Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
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Karsted Air Services is now in the final year of a project. The equipment originally cost $27 million, of which 80% has been depreciated. Karsted can sell the used equipment today for $6.75 million, and its tax rate is 35%. What is the equipment's after-tax salvage value?
What is the equipment's after -tax salvage value for these accounting question?
Nozark Corp. is now in the final year of a project. The equipment originally cost $9,179, and the asset has been has been depreciated on a straight-line basis to a book value of $736. Nozark can sell the used equipment for $2,448, and its tax rate is 30%. The equipment's net after-tax salvage value is $_________. In other words, find the net after-tax cash flow effect of selling the equipment. Do not round any intermediate work. Round your *final* answer to 2 decimal places (example: 12.34567 = 12.35). Do not enter the $ sign.
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Karsted Air Services is now in the final year of a project. The equipment originally cost $24 million, of which 100% has been depreciated. Karsted can sell the used equipment today for $10 million, and its tax rate is 30%. What is the equipment's after- tax salvage value?