
(a)
The actual dollar after tax

Answer to Problem 83P
The actual dollar after tax rate of return is
Explanation of Solution
Given:
Net annual income to the owner is
Purchase amount of the property is
Cost of the land is
The selling price
The income tax rate is
Calculation:
Calculate the before tax cash flow for year 1.
Here, the inflation rate is
Substitute
Calculate the before tax cash flow for year 2.
Here, the inflation rate is
Substitute
Calculate the before tax cash flow for year
Substitute
Calculate the before tax cash flow for year
Substitute
Calculate the before tax cash flow for year
Substitute
Calculate the cost of home.
Here, the property cost is
Substitute
Write the expression to calculate the market value plus
Here, the market value of the precious year is
Calculate the market value plus
Substitute
Calculate the market value plus
Substitute
Calculate the market value plus
Substitute
Calculate the market value plus
Substitute
Calculate the market value plus
Substitute
Calculate the market value plus
Substitute
Make the table to calculate the MARCS
Year | Initial Cost |
MARCS rate |
Depreciation |
Make the table to calculate the after tax cash flow.
Year | BTCF |
Market Value of property |
Depreciation |
TaxableIncome |
Income taxes |
ATCF |
The
Thus the selling price of the property is
Write the expression to calculate the capital gain.
Substitute
Calculate the tax on capital gain.
Write the expression to calculate the recaptured depreciation.
Substitute
Calculate the tax on recaptured depreciation.
Calculate the total tax on disposal.
Substitute
Calculate the rate of return.
Here, the property cost is
Substitute
Solve the equation for the value of
Here, the value of
Conclusion:
The actual dollar after tax rate of return is
(b)
The after tax return for the owner.

Answer to Problem 83P
The after tax return for the owner is
Explanation of Solution
Year | ATCF |
ATCF Year |
Calculate the after tax rate of return in year
Write the expression to calculate the after tax rate of return.
Here, the present worth is P, the after tax cash flow is A, the rate of return is i.
Substitute
Salve for the value of
Conclusion:
The after tax return of the owner is
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Chapter 14 Solutions
ENGINEERING ECO ANALYSIS W/STUDY GUIDE
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