Question
In: Economics
An asset with a first cost of $9000 is depreciated using 5-year MACRS recovery. The CFBT...
An asset with a first cost of $9000 is depreciated using 5-year MACRS recovery. The CFBT is estimated at $10,000 for the first 4 years and $5000 thereafter as long as the asset is retained. The effective tax rate is 40%, and money is worth 10% per year. In present worth dollars, how much of the cash flow generated by the asset over its recovery period is lost to taxes?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
An asset with the first cost of $100,000 is depreciated over a 5-year period. It is...
An asset with the first cost of $100,000 is depreciated over a
5-year period. It is expected to have a $10,000 salvage value at
the end of 5 years.
(1) Using the straight-line method, what is the net book value
at the end of year 2?
(2) Using the sum of years digit method, what is the
depreciation expense for year 1?
(3) Using the double-declining balance method, what is the
depreciation expense for year 3?
Plz type the answer...
Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery...
Rounded Depreciation Percentages by Recovery Year Using MACRS
for
First Four
Property Classes
Percentage
by recovery year*
Recovery year
3
years
5
years
7
years
10
years
1
33%
20%
14%
10%
2
45%
32%
25%
18%
3
15%
19%
18%
14%
4
7%
12%
12%
12%
5
12%
9%
9%
6
5%
9%
8%
7
9%
7%
8
4%
6%
9
6%
10
6%
11
4%
Totals
100%
100%
100%
100%
A
firm is considering renewing its equipment to...
An asset has a first cost of $45,000, a recovery period of 5 years, and a...
An asset has a first cost of $45,000, a recovery period of 5
years, and a $3000 salvage value. Use the DDB depreciation method
(making sure that last book value equals the salvage value), and
calculate the present worth of depreciation at i = 18% per
year.
You purchased a machine for $500,000 (installed), and you depreciated it using a 5 year MACRS....
You purchased a machine for $500,000 (installed), and you
depreciated it using a 5 year MACRS. This machine generates
$200,000 in annual revenue. In year 4, you sold the machine for
$250,000. You received a loan for $400,000 on a 5 year loan at 5%
(note, you must pay the remaining balance of this loan at the end
of year 4 from the proceeds of the sale). In addition, you invested
$80,000 in working capital initially. Your company is in...
A new $110,000 machine will be depreciated using a 5-year MACRS schedule. It should generate $45,000...
A new $110,000 machine will be depreciated using a 5-year MACRS
schedule. It should generate $45,000 per year in additional
revenues, and $20,000 per year in additional cash operating costs
per year. If the firm has a tax rate of 39%, calculate the year 4
incremental net operating cash flow.
$28,891
$20,192
$41,927
$19,021
none of the above
A. A fixed asset is classified as 5-year MACRS property and has an initial cost of...
A.
A fixed asset is classified as 5-year MACRS property and has an
initial cost of $41,000 What is the aftertax cash flow from the
sale of this asset if the pre-tax salvage value at the end of year
3 is $17,500 and the tax rate is 34 percent?
Year
Five-Year
Property Class
1
20.00
%
2
32.00
3
19.20
4
11.52
5
11.52
6
5.76
$15,439.38
$15,558.04
$15,564.72
$15,463.06
B.
A firm has sales for the...
Table: Rounded Depreciation Percentage by Recovery Year Using MACRS for First Four Property Classes Percentage by...
Table: Rounded Depreciation Percentage by Recovery Year Using
MACRS for First Four Property Classes
Percentage by recovery year
Recovery year 3 years 5 years 7 years 10 years
1 33% 20% 14% 10%
2 45 32 25 18
3 15 19 18 14
4 7 12 12 12
5 12 9 9
6 5 9 8
7 9 7
8 4 6
9 6
10 6
11 4
Total 100% 100% 100% 100%
a. Determine the after-tax cash outflows of...
An asset used in a 4-year project falls in the 5-year MACRS class (refer to MACRS...
An asset used in a 4-year project falls in the 5-year MACRS
class (refer to MACRS table on page 277), for tax purposes. The
asset has an acquisition cost of $16,517,578 and will be sold for
$7,378,085 at the end of the project. If the tax rate is 0.28, what
is the aftertax salvage value of the asset ?
An asset used in a 4-year project falls in the 5-year MACRS class (MACRS Table) for...
An asset used in a 4-year project falls in the 5-year MACRS
class (MACRS Table) for tax purposes. The asset has an acquisition
cost of $12,240,000 and will be sold for $2,720,000 at the end of
the project.
If the tax rate is 23 percent, what is the aftertax salvage
value of the asset?
Multiple Choice
$2,580,867
$2,094,400
$2,859,133
$2,709,910
$2,451,823
An asset used in a 4-year project falls in the 5-year MACRS class (MACRS Table) for...
An asset used in a 4-year project falls in the 5-year MACRS
class (MACRS Table) for tax purposes. The asset has an acquisition
cost of $18,180,000 and will be sold for $4,040,000 at the end of
the project.
Required:
If the tax rate is 33 percent, what is the aftertax salvage
value of the asset?
Options
$3,743,496
$2,706,800
$4,336,504
$3,930,671
$3,556,322
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