Question
In: Finance
1. Gig Harbor, Inc. is considering the purchase of a 5-year MACRS equipment at $205,000. The...
1. Gig Harbor, Inc. is considering the purchase of a 5-year MACRS equipment at $205,000. The company expects to sell the equipment after four years at a price of $55,000. What is the after-tax cash flow from this sale if the tax rate is 35 percent?
MACRS 5-year property
Year Rate
1 20.00%
2 32.00%
3 19.20%
4 11.52%
5 11.52%
6 5.76%
2. Spokane, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.8 million. The fixed asset falls into the 3-year MACRS class (0.3333, 0.4445, 0.1481, 0.0741) and will have a market value of $214,200 after 3 years. The project requires an initial investment in net working capital of $306,000. The project is estimated to generate $2,448,000 in annual sales, with costs of $979,200. The tax rate is 34 percent and the required return on the project is 8 percent. What is the initial capital outlay for the project?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Three years ago, you purchased some 5-year MACRS equipment at a cost of $135,000. The MACRS...
Three years ago, you purchased some 5-year MACRS equipment at a
cost of $135,000. The MACRS rates are 20 percent, 32 percent, 19.2
percent, 11.52 percent, 11.52 percent, and 5.76 percent for Years 1
to 6, respectively. You sold the equipment today for $82,500. Which
of these statements is correct if your tax rate is 23 percent and
you ignore bonus depreciation?
Multiple Choice
The tax due on the sale is $10,032.60.
The book value today is $40,478.
The book...
ABC Company purchased $50484 of equipment 5 years ago. The equipment is 7-year MACRS property. The...
ABC Company purchased $50484 of equipment 5 years ago. The
equipment is 7-year MACRS property. The firm is selling this
equipment today for $8128. What is the After-tax Salvage Value if
the tax rate is 35 percent? The MACRS allowance percentages are as
follows, commencing with year one: 14.29, 24.49, 17.49, 12.49,
8.93, 8.92, 8.93, and 4.46 percent. Enter your answer rounded off
to two decimal points. Do not enter $ or comma in the answer box.
For example, if...
Subject: Engineering Economics A company is considering the purchase of a material handling (MACRS-7 year property...
Subject: Engineering Economics
A company is considering the purchase of a material handling
(MACRS-7 year property class) automated system for its distribution
center. The new system costs $350,000 has an estimated life of 8
years and an estimated salvage value at that time of 20% of initial
cost. Annual maintenance are estimated 25% of its first cost
regardless of its level of usage. The operating costs of the system
depends on the use, at a rate of $3/piece. The current...
Med Inc. is considering the purchase of a new equipment to produce face marks. The equipment...
Med Inc. is considering the purchase of a new equipment to
produce face marks. The equipment would be depreciated by the
straight-line method over its 4-year life, and would have a $10,000
salvage value. Accounts payable will rise by $5,000 at time 0 but
will be recovered at the end of the project’s life. Revenues and
annual operating costs are expected to be constant over the
project's 4-year life. The other information is shown below.
Risk-adjusted WACC 12.0%
Equipment purchase...
YEAR MACRS 3-YEAR 1 33% 2 45% 3 15% 4 7% Troll Inc is considering replacing...
YEAR MACRS 3-YEAR
1
33%
2
45%
3
15%
4
7%
Troll Inc is considering replacing an old, relatively
inefficient Troll onjection-mold machine that was purchased three
years ago with a new, more effiecent model. The cost of the old
machine has $7500 and had an expected MACRS life of three years. If
they sell the old machine now they would receive $1000. However, at
the end of five years the old machine is worthless. The cost of the
new...
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
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 $17341411 and will be sold for
$7116692 at the end of the project. If the tax rate is 0.29, what
is the aftertax salvage value of the asset (SVNOT)?
Eggs Inc. is considering the purchase of new equipment that will allow them to collect a...
Eggs Inc. is considering the purchase of new equipment that will
allow them to collect a loose head feathers for sale. the equipment
will cost $465,000 it will be eligible for 100% bonus depreciation
the equipment can be sold for $69,000 at the end of the project in
five years sales would be $307,000 per year with annual fix cost of
$55,000 and variable cost equals 36% of sales the project would
require an investment of $41,000 in NWC that...
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