Question
In: Finance
AFTER TAX SALVAGE VALUE Karsted Air Services is now in the final year of a project....
AFTER TAX SALVAGE VALUE
Karsted Air Services is now in the final year of a project. The equipment originally cost $26 million, of which 90% has been depreciated. Karsted can sell the used equipment today for $6.5 million, and its tax rate is 35%. What is the equipment's after-tax salvage value? Round your answer to the nearest dollar. Write out your answer completely. For example, 13 million should be entered as 13,000,000.
Solutions
Expert Solution
Answer - After tax salvage value = $5,135,000
Reason -
Book value of Asset after depreciation = $26 million * 10% = $2.6 million
Value of equipment today = $6.5 million
So net gain on sale = $6.5 million - $2.6 million = $3.9 million
Tax on Net gain = $3.9 million * 35% = 1.365 million.
So After tax salvage value = $6.5 million - 1.365 million = 5.135 million or $5,135,000
jeff jeffy answered 2 years agoRelated Solutions
AFTER TAX SALVAGE VALUE Karsted Air Services is now in the final year of a project....
AFTER TAX SALVAGE VALUE Karsted Air Services is now in the final
year of a project. The equipment originally cost $23 million, of
which 80% has been depreciated. Karsted can sell the used equipment
today for $5.75 million, and its tax rate is 40%. What is the
equipment's after-tax salvage value? Round your answer to the
nearest dollar. Write out your answer completely. For example, 13
million should be entered as 13,000,000. $ ________
4. REPLACEMENT ANALYSIS The Oviedo Company...
AFTER TAX SALVAGE VALUE Karsted Air Services is now in the final year of a project....
AFTER TAX SALVAGE VALUE
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 40%. What is the equipment's after-tax
salvage value? Round your answer to the nearest dollar. Write out
your answer completely. For example, 13 million should be entered
as 13,000,000.
After tax salvage value Kennedy Air Services is now in the final year of a project....
After tax salvage value Kennedy Air Services is now in the final
year of a project. The equipment originally cost $25 million, of
which 85% has been depreciated. Kennedy can sell the used equipment
today for $6.25 million, and its tax rate is 35%. What is the
equipment's after-tax salvage value? Round your answer to the
nearest cent. Write out your answer completely. For example, 13
million should be entered as 13,000,000.
a. Karsted Air Services is now in the final year of a project. The equipment originally...
a. Karsted Air Services is now in the final year of a project.
The equipment originally cost $23 million, of which 80% has been
depreciated. Karsted can sell the used equipment today for $5.75
million, and its tax rate is 30%. What is the equipment's after-tax
salvage value? Round your answer to the nearest dollar. Write out
your answer completely. For example, 13 million should be entered
as 13,000,000.
b.Clemson Software is considering a new project whose data are
shown...
1. Karsted Air Services is now in the final year of a project. The equipment originally...
1. Karsted Air Services is now in the final year of a project.
The equipment originally cost $20 million, of which 75% has been
depreciated. Karsted can sell the used equipment today for $5
million, and its tax rate is 40%. What is the equipment's after-tax
salvage value? Round your answer to the nearest dollar. Write out
your answer completely. For example, 13 million should be entered
as 13,000,000.
2. Project L costs $48,152.88, its expected cash inflows are
$10,000...
Karsted Air Services is now in the final year of a project. The equipment originally cost...
Karsted Air Services is now in the final year of a project. The
equipment originally cost $35 million, of which 90% has been
depreciated. Karsted can sell the used equipment today for $8.75
million, and its tax rate is 30%. What is the equipment's after-tax
salvage value? Round your answer to the nearest dollar. Write out
your answer completely. For example, 13 million should be entered
as 13,000,000. Marble Construction estimates that its WACC is 10%
if equity comes from...
Karsted Air Services is now in the final year of a project. The equipment originally cost...
Karsted Air Services is now in the final year of a project. The
equipment originally cost $26 million, of which 80% has been
depreciated. Karsted can sell the used equipment today for $6.5
million, and its tax rate is 30%. What is the equipment's after-tax
salvage value? Write out your answer completely. For example, 13
million should be entered as 13,000,000. Round your answer to the
nearest dollar.
A project ends after 4 years. The after tax salvage value is 12,860 and the released...
A project ends after 4 years. The after tax salvage value is
12,860 and the released working capital equals 40,000 at the end of
the project. Assume a 9.82% WACC and compute the present value of
the terminal cash flows.
Which of the following is a correct calculation for after-tax salvage value if salvage value and...
Which of the following is a correct calculation for after-tax
salvage value if salvage value and book value differ?
A) Salvage – T(book value – salvage)
B) (Initial cost - Salvage)T – (book value – salvage)
C) Salvage – T(salvage – (initial cost – accumulated
depreciation))
D) (Salvage – accumulated depreciation)T – (salvage
– book value)
Find the present value of the depreciation tax shield and the present value of the after-tax salvage value
Find the present value of the depreciation tax shield and the present value of the after-tax salvage value, if the annual depreciation is $6,000 for 5 years, the after-tax salvage value is $9,000, and the tax rate is 40%. The required rate of return is 10%. The lease lasts for 5 years. Present value of depreciation tax shield = $9,098 Present value of after-tax salvage value = $34,117 Present value of depreciation tax shield = $22,744 Present value of after-tax salvage value...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Charming Paper Company sells to the 12 accounts listed here. Account Receivable Balance Outstanding Average...
- Computer Networks IT 210 Please Use your own words . sorry No handwriting no copy paste...
- I would like to integrate a bubble sort into this binary search in c ++ Thank...
- Answer the bottom in 1-2 paragraphs Classical conditioning is a learned behavior where previously neutral response...
- identify one intrapersonal relationship and evaluate its component.
- Using Python in vs code: The distribution of letters in a document has a distinctive and...
- Why is De Beers exploring the diamond reselling market? How does the creation of IIDV affect...
ADVERTISEMENT