Using Excell Your company is evaluating a new project that will require the purchase of an...

Using Excell

Your company is evaluating a new project that will require the purchase of an asset for $25,000 installed. The asset will be depreciated S/L for 5 years to zero salvage. Your company is expecting the asset to have a market value of $4,000 at the end of 5 years. The applicable tax rate is 30% and the cost of capital is 12%

a) Calculate the after tax asset value for the asset at the end of 5 years.

b) Calculate the gain or (loss) from the sale of the asset at the end of 5 years? (And indicate whether it is a gain or a loss.

c) Calculate the tax consequences from the sale of the asset in 5 years and indicate whether it is a tax liability or tax saving.

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Q1: Your company is evaluating a new project that will require the purchase of an asset...

Q1: Your company is evaluating a new project that will require the purchase of an asset for $22,000 installed. The asset will be depreciated S/L for 5 years to a zero salvage. Your company is expecting the asset to have a market value of $5,500 at the end of 4 years. The applicable tax rate is 30% and the cost of capital is 12% a) Calculate the after tax asset value for the asset at the end of 4 years....

1. Your company is evaluating a new project that will require the purchase of an asset...

1. Your company is evaluating a new project that will require the purchase of an asset for $22,000 installed. The asset will be depreciated S/L for 5 years to a zero salvage. Your company is expecting the asset to have a market value of $5,500 at the end of 4 years. The applicable tax rate is 30% and the cost of capital is 12% a) Calculate the after tax asset value for the asset at the end of 4 years....

Your company is evaluating a project that will require the purchase of an asset with a...

Your company is evaluating a project that will require the purchase of an asset with a price of $16,000 the shipping will cost an additional $1,500 and installation will be $850. The new project will require an increase in inventory of $300, an increase in A/R of $200 and an increase in A/P of $100 in the initial period. Assuming tax rate of 30%, what is the initial outlay, in year 0, for this project?

A company is considering a new project. This project will require the purchase of $321,000 of...

A company is considering a new project. This project will require the purchase of $321,000 of equipment, the purchase of $45,000 in inventory and will increase accounts payable by $73,000. Expected sales are $625,000 with costs of $480,000. The project will last for five years, be taxed at 35% and have a required rate of return of 14%. The equipment will have no salvage value at the end of the project and will be depreciated using the MACRS three-year class....

Your company is considering a project which will require the purchase of $685,000 in new equipment....

Your company is considering a project which will require the purchase of $685,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $244,000. Initial net working capital equal to 30.50% of sales will be required. All of the net working capital will be recovered at the end of the project....

Your company is considering a project which will require the purchase of $715,000 in new equipment....

Your company is considering a project which will require the purchase of $715,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $256,000. Initial net working capital equal to 32.00% of sales will be required. All of the net working capital will be recovered at the end of the project....

Your company is considering a project which will require the purchase of $725,000 in new equipment....

Your company is considering a project which will require the purchase of $725,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $260,000. Initial net working capital equal to 32.50% of sales will be required. All of the net working capital will be recovered at the end of the project....

Your company is considering a project which will require the purchase of $805,000 in new equipment....

Your company is considering a project which will require the purchase of $805,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $292,000. Initial net working capital equal to 36.50% of sales will be required. All of the net working capital will be recovered at the end of the project....

Your company is considering a project which will require the purchase of $775,000 in new equipment....

Your company is considering a project which will require the purchase of $775,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $280,000. Initial net working capital equal to 35.00% of sales will be required. All of the net working capital will be recovered at the end of the project....

Your company is considering a project which will require the purchase of $785,000 in new equipment....

Your company is considering a project which will require the purchase of $785,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $284,000. Initial net working capital equal to 35.50% of sales will be required. All of the net working capital will be recovered at the end of the project....

Subjects