Consider a piece of equipment that initially cost $8,000 and has these estimated annual expenses and MV: End of Year, k 2 3 6 7 8 3 years 4 years 6 years Annual Expenses 7 years $3,000 3,000 If the after-tax MARR is 7% per year, determine the after-tax economic life of this equipment. MACRS (GDS) depreciation is being used (five-year property class). The effective income tax rate is 40%. 3,500 4,000 4,500 5,250 6,250 7,750 MV at End of Year $4,700 3,200 2,200 1,450 950 600 300 0 Reread chapter and try again. Use equation to calculate the TC for each year of retention, and solve for EUAC of each year.

Consider a piece of equipment that initially cost $8,000 and has these estimated annual expenses and MV: End of Year, k 2 3 6 7 8 3 years 4 years 6 years Annual Expenses 7 years $3,000 3,000 If the after-tax MARR is 7% per year, determine the after-tax economic life of this equipment. MACRS (GDS) depreciation is being used (five-year property class). The effective income tax rate is 40%. 3,500 4,000 4,500 5,250 6,250 7,750 MV at End of Year $4,700 3,200 2,200 1,450 950 600 300 0 Reread chapter and try again. Use equation to calculate the TC for each year of retention, and solve for EUAC of each year.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

Consider a piece of equipment that initially cost $8,000 and has these estimated annual expenses and MV: End of Annual Year, k Expenses 1 2 3 4 5 6 7 8 5 years 3 years 6 years $3,000 3,000 3,500 4,000 7 years 4,500 5,250 6,250 7,750 If the after-tax MARR is 7% per year, determine the after-tax economic life of this equipment. MACRS (GDS) depreciation is being used (five-year property class). The effective income tax rate is 40%. MV at End of Year $4,700 3,200 2,200 1,450 950 600 300 0
Consider a piece of equipment that initially cost $8,000 and has these estimated annual expenses and MV: If the after-tax MARR is 7% per year, determine the after-tax economic life of this equipment. MACRS (GDS) depreciation is being used (five-year property class). The effective income tax rate is 40%.
The capital cost of a property is $5900000. A CCA rate of 20% is applied. The tax rate is 30%.Take five years of depreciation. Ifthe propertyis sold after five years for $1990000 what is theDisposal Tax Effect?Note: Please enter your answer to two decimal PlacesAnswer
An equipment's with 5 years useful life is with initial cost of $1,000,000. After 5 years, the equipment's useful life will be The equipment's value will be depreciated linealy. Tax rate = 20% . What is the after tax residual value of this equipment at the end of 4th year if the equipment was sold at 2,000. $ 18200 $ 25700 $20300 $41600
In year 0 you purchase an asset for $500,000 and in year 1 you receive a positive cash flow of $100,000 from operating the asset. Following a MACRS 7-year depreciation schedule (year 1 recovery rate of 14.29 percent) and assuming you are in a 39% tax bracket, what is your year 1 after tax cash flow (ATCF) to the nearest $50 ? O a) $88,750 O b) $28,550 c) $400,000 O d) $380,750 O e) $11,250
Initial equipment cost=$100,000 Market value at the end of 6 years = $6,000 Use MACRS depreciation. The team is a "3 year property". Combined incremental tax rate is 25%. Año 0 1 2 3 4 5 6 BTCF*($) -100K 40K 40K 45K 30K 5K 5K *Before tax cash flow Fill the whites: (a)The taxable income at the end of the first year is $(Answer) b) The tax payable in the first year is $(Answer) c) The after-tax cash flow (ATCF) for year 1 is $(answer)
An asset with initial cost base of 6 million was bought 5 years ago.At the end of the current year (fifth year) the asset is sold by 1.1 million. The asset belongs to the 7 years MACRS property class. Knowing that the gain (loss) tax rate 40%,what is the net proceeds resulted from selling the asset? Type your answer in ms word
Consider an asset cost 1.5 million and is depreciated straight ine to zero over its eight years tax life . The asset is to be used in a six year project and at the end of the project the asset can be sold for 250,000 $ . If the tax rate is 24 % calculate the after tax salvage of the asset
An equipment's with 5 years useful life is with initial cost of $5,000. After 5 years, the equipment's useful life will be 0. The equipment's value will be depreciated linearly. Tax rate=30%. What is the after tax residual value of this equipment at the end of 3th year if the equipment was sold at 4,000. $2800 $4200 $3400 $1500
Electric utility transmission and distribution equipment (MACRS-GDS 20-year property) is placed in service at a cost of $300,000. It is expected to last 30 years with a salvage value of $15,000. Determine the depreciation deduction and the book value during each year of the first 4 tax years using MACRS-GDS allowances. a. Use 50% bonus depreciation. b. Use 100% bonus depreciation.
You pay $18,000 for new equipment plus you pay $2,000 to install it, which is added to the cost basis. Each year for five years, you earned $5,000 from the use of this equipment from which you then needed to subtract $1,000 in expenses. (a) Using straight-line depreciation over a 5-year lifetime (with a half-year adjustment in years 1 and 6) and a tax rate of 28%, what was your after-tax cash flow (ATCF) from this investment in year 3? (b) Using the GDS depreciation schedule for a 5-year recovery period, what was your ATCF in year 3? GDS depreciation schedule for a 5-year recovery period year = 12345 6 factor = 0.20 0.32 0.192 0.1152 0.1152 0.0576 (c) What is the present worth at time 0 of this investment using a MARR of 8%?
An asset with a purchase price of $501,013 falls in the 3-year MACRS asset class. The asset will be sold at the end of a three year project for $180,745. What is the book value of the asset at the end of the project? Round your answer to the nearest dollar. Year Depreciable Allowance 1 33% 2 45 3 15 4 7