Question

In: Finance

Brock Florist Company bought a new delivery truck for ​$29,000. It was classified as a​ light-duty...

Brock Florist Company bought a new delivery truck for

​$29,000.

It was classified as a​ light-duty truck. The company sold its delivery truck after three years of service. If a​ five-year life and​ MACRS,

LOADING...

​,

was used for the depreciation​ schedule, what is the​ after-tax cash flow from the sale of the truck​ (use a

40​%

tax​rate) if

a.  the sales price was

​$16,000​?

b.  the sales price was

​$10,000​?

c.  the sales price was

​$1,000​?

Year   3-Year   5-Year   7-Year   10-Year
1   33.33%   20.00%   14.29%   10.00%
2   44.45%   32.00%   24.49%   18.00%
3   14.81%   19.20%   17.49%   14.40%
4   7.41%   11.52%   12.49%   11.52%
5       11.52%   8.93%   9.22%
6       5.76%   8.93%   7.37%
7           8.93%   6.55%
8           4.45%   6.55%
9               6.55%
10               6.55%
11               3.28%

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE


Related Solutions

Brock Florist Company buys a new delivery truck for $29,000. It is classified as a light-duty...
Brock Florist Company buys a new delivery truck for $29,000. It is classified as a light-duty truck. Brock is in a 30% tax bracket and has a cost of capital of 8%. Assume that Brock will sell its delivery truck after three years of service for $15,000. a. Calculate the NPV of the equipment purchase using a five-year life with straight-line depreciation to zero salvage. b. Calculate the NPV of the equipment purchase using a five-year life and MACRS depreciation....
Brock Florist Company buys a new delivery truck for ​$30,000. It is classified as a​ light-duty...
Brock Florist Company buys a new delivery truck for ​$30,000. It is classified as a​ light-duty truck. the tax rate is 0.2 a. Calculate the depreciation schedule using a​ five-year life and MACRS depreciation. b. Calculate the remaining book value at the end of year 4 and the termination value​ (aka. cost recovery or after tax salvage​ value) for the delivery truck if the truck can be sold at the end of year 4 ​for$4,000. a. Year 1: Year 2:...
Brock Florist Company buys a new delivery truck for $28,000. It is classified as a​ light-duty...
Brock Florist Company buys a new delivery truck for $28,000. It is classified as a​ light-duty truck. the tax rate is 0.25 a. Calculate the depreciation schedule using a​ five-year life and MACRS depreciation. b. Calculate the remaining book value at the end of year 4 and the termination value​ (aka. cost recovery or after tax salvage​ value) for the delivery truck if the truck can be sold at the end of year 4 ​for$4 comma 0004,000. a.  Calculate the...
Big Dog Florists (BDF) just purchased a new delivery truck for $29,000, a light truck. The...
Big Dog Florists (BDF) just purchased a new delivery truck for $29,000, a light truck. The book value at the end of the year 4 is $5,011.20 a. Big Dog Florists (BDF) sold its delivery truck after three years (Prob. 1). Using a 30% tax rate, what is the after-tax salvage value for the truck if BDF sells the truck for $15,000? b. Big Dog Florists (BDF) sold its delivery truck after three years (Prob. 1). Using a 30% tax...
Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck has an...
Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck has an expected salvage value of $2,100, and is expected to be driven 106,000 miles over its estimated useful life of 10 years. Actual miles driven were 15,300 in 2017 and 13,400 in 2018. Correct answer. Your answer is correct. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.52.) Depreciation expense $Entry field with correct answer .25 per mile...
Your team asks VTEPS, Inc. to purchase a light duty delivery truck for $15,000. It is...
Your team asks VTEPS, Inc. to purchase a light duty delivery truck for $15,000. It is anticipated that the purchase of the truck will increase revenue by $10,000 annually, but have operating expenses of $3,000 per year. If your teams plans to sell the truck after two years, what is the minimum that your team can sell the truck for (i.e., MV) after 2 years in order for this to be profitable for VTEPS, Inc.?And what is the maximum that...
Lake Company bought a used delivery truck on January 1, 2017, for $20,000. The delivery truck...
Lake Company bought a used delivery truck on January 1, 2017, for $20,000. The delivery truck was expected to remain in service 4 years (50,000 miles). Lake's accountant estimated that the truck’s residual value would be $2,000 at the end of its useful life. The truck traveled 14,000 miles the first year and 18,000 miles the second year. Calculate depreciation expense for the truck for 2017 and 2018 using the • Straight-line method. • Double-declining balance method • Units of...
At Year 0, Vermont wood manufactures Inc. purchased a light duty delivery truck for $32,000 that...
At Year 0, Vermont wood manufactures Inc. purchased a light duty delivery truck for $32,000 that has a 7-year service life. The truck was place in service from Year 1. At the end of Year 7, it will be sold at a salvage value of $3000. The light duty delivery truck has been depreciated according to a 7 year MACRS property class. Calculate the annual depreciation allowances over 7 years. (8 points) Calculate the annual book values over 7 years....
Exercise 9-7 Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck...
Exercise 9-7 Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck has an expected salvage value of $1,100, and is expected to be driven 109,000 miles over its estimated useful life of 5 years. Actual miles driven were 12,200 in 2017 and 10,000 in 2018. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.52.) Depreciation expense $___________ per mile Compute depreciation expense for 2017 and 2018 using (1)...
Clifford Delivery Company purchased a new delivery truck for $72,000 on April 1, 2019. The truck...
Clifford Delivery Company purchased a new delivery truck for $72,000 on April 1, 2019. The truck is expected to have a service life of 5 years or 90,000 miles and a residual value of $3,000. The truck was driven 8,000 miles in 2019 and 20,000 miles in 2020. Clifford computes depreciation expenses to the nearest whole month. Required: Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) Straight-line method 2019 $...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT