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In: Finance
1. A proposed cost-saving project requires a device with an installed cost of $540,000. The project...
1. A proposed cost-saving project requires a device with an installed cost of $540,000. The project will last for five years. The device has a CCA rate of 20%. The required initial net working capital investment is $20,000, the marginal tax rate is 37%, and the required return on the project is 11%. The device has an estimated salvage value of $95,000 at the end of Year 5, and the net working capital investment will also be recovered at the end of Year 5. What level of pre-tax cost savings do we require for this project to be profitable?
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jeff jeffy answered 9 months agoRelated Solutions
1. A proposed cost-saving project requires a device with an installed cost of $540,000. The project...
1. A proposed cost-saving project requires a device with
an installed cost of $540,000. The project will last for five
years. The device has a CCA rate of 20%. The required initial net
working capital investment is $20,000, the marginal tax rate is
37%, and the required return on the project is 11%. The device has
an estimated salvage value of $95,000 at the end of Year 5, and the
net working capital investment will also be recovered at the...
A proposed cost-saving project requires a device with an installed cost of $540,000. The project will...
A proposed cost-saving project requires a device with an
installed cost of $540,000. The project will last for five years.
The device has a CCA rate of 20%. The required initial net working
capital investment is $20,000, the marginal tax rate is 37%, and
the required return on the project is 11%. The device has an
estimated salvage value of $95,000 at the end of Year 5, and the
net working capital investment will also be recovered at the end...
A proposed cost-saving device has an installed cost of $800,000. The device will be used in...
A proposed cost-saving device has an installed cost of $800,000.
The device will be used in a five-year project but is classified as
three-year MACRS property for tax purposes. The required initial
net working capital investment is $81,000, the marginal tax rate is
23 percent, and the project discount rate is 8 percent. The device
has an estimated Year 5 salvage value of $124,000. What level of
pretax cost savings do we require for this project to be
profitable? MACRS...
A proposed cost-saving device has an installed cost of $815,000. The device will be used in...
A proposed cost-saving device has an installed cost of $815,000.
The device will be used in a five-year project but is classified as
three-year MACRS property for tax purposes. The required initial
net working capital investment is $87,000, the marginal tax rate is
21 percent, and the project discount rate is 11 percent. The device
has an estimated Year 5 salvage value of $133,000. What level of
pretax cost savings do we require for this project to be
profitable?
What...
A proposed cost-saving device has an installed cost of $705,000. The device will be used in...
A proposed cost-saving device has an installed cost of $705,000.
The device will be used in a five-year project but is classified as
three-year MACRS property for tax purposes. The required initial
net working capital investment is $115,000, the marginal tax rate
is 22 percent, and the project discount rate is 13 percent. The
device has an estimated Year 5 salvage value of $86,000. What level
of pretax cost savings do we require for this project to be
profitable? MACRS...
A proposed cost-saving device has an installed cost of $725,000. The device will be used in...
A proposed cost-saving device has an installed cost of $725,000.
The device will be used in a five-year project but is classified as
three-year MACRS property for tax purposes. The required initial
net working capital investment is $135,000, the marginal tax rate
is 21 percent, and the project discount rate is 13 percent. The
device has an estimated Year 5 salvage value of $98,000. What level
of pretax cost savings do we require for this project to be
profitable? MACRS...
A proposed cost-saving device has an installed cost of $585,000. The device will be used in...
A proposed cost-saving device has an installed cost of $585,000.
The device will be used in a five-year project but is classified as
three-year MACRS (MACRS Table) property for tax purposes. The
required initial net working capital investment is $45,000, the
marginal tax rate is 35 percent, and the project discount rate is
12 percent. The device has an estimated Year 5 salvage value of
$65000.
Required:
What level of pretax cost savings do we require for this project...
A proposed cost-saving device has an installed cost of $820,000. The device will be used in...
A proposed cost-saving device has an installed cost of $820,000.
The device will be used in a five-year project but is classified as
three-year MACRS property for tax purposes. The required initial
net working capital investment is $89,000, the marginal tax rate is
22 percent, and the project discount rate is 8 percent. The device
has an estimated Year 5 salvage value of $136,000. What level of
pretax cost savings do we require for this project to be
profitable? MACRS...
a proposed cost-saving device has an installed cost of 725000. The device will be used in...
a proposed cost-saving device has an installed cost of
725000. The device will be used in a five-year project but is
classified as three-year MACRS property for tax purposes. The
required initial net working capital investment is 135000, the
marginal tax rate is 21 percent, and the,project discount rate is
13 percent. The,device has an estimated Year 5 salvage value of
98000. what level of pretax cost saving do,we require for this
project to be profitable?
yr
3
yr
5...
A proposed cost- saving device has an installed cost of $735,000. The device will be used...
A proposed cost- saving device has an installed cost
of $735,000. The device will be used in a five year project but is
classified as a three year MACR property for tax purposes. The
required initial net working capital investment is $55,000, the tax
rate is 22 percent and the project discount rate is 9 percent. The
device has an estimated Year 5 salvage value of $85,000. What level
of pretax cost savings do we require for this project to...
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