Financing Options for a Solar Energy Project

For the depreciation part, we adopted the straight-line method. Here since the depreciation of year 1984 was $1270, we just assumed all the depreciation amount to be equal to $1270 till the year 1989. With all of these previous assumptions, we obtain the complete pro forma financial statement and the cash flow table for the Collinsville Plant.

Taxable income includes a deduction for $40,000 of depreciation that exceeds the depreciation allowed for E&P purposes.

1. The first step to evaluating the cash flows is to conduct the depreciation tax flow analysis. Depreciation is not a cash flow, but the depreciation expense lows the taxes payable for the company. As a result, the tax effect of deprecation needs to be calculated as a cash flow. There are two depreciable items on the company's balance sheet the building and the equipment. The equipment is known to have a seven year depreciable life, which will be assumed to be straight line. The building is also assumed to be subject to straight line depreciation, this time of forty years. The tax saving reflects the depreciation expense multiplied by the tax rate, which in this case is assumed to be 28%. The following table illustrates the tax effect in future dollars of the depreciation expense:

in monthly savings around to $139. Over time you could save $33,284, with a repayment period of about

c. Depreciation is computed using the straight-line method over the asset’s estimated useful life, which is determined by asset category as follows: Buildings and improvements (5 – 40 years); Store fixtures and equipment (3 – 15years), Leasehold improvements (Shorter of initial lease term or asset life); Capitalized software (3 – 7 years).

| In Year 1, depreciation is $5,000 plus 15% of the asset’s outlayFrom Year 2, depreciation is either * 30% of the asset’s book value; or * if the asset’s book value is less than $6,500, depreciation is the asset’s book value (i.e. asset is depreciated to zero once book value < $6,500)

16. What would the pre-tax lease payment have to be for you to be indifferent between leasing or buying?

(Code §219(c )) With the lease payment and the IRA’s John will have deductions of $52,000 against the $300,000 and an additional deduction of paying half of the self employment tax. ()

Since John and Jane do not have employer sponsored retirement programs, I recommend establishing traditional IRA’s. This will allow both of them to have a retirement program and a tax deduction each year of $10,000 (§219(f) (3)) (Tax Almanac, 2007, April 27). John is able to establish Jane’s IRA and contribute since she has minimal income (Code §219(c )) (Tax Almanac, 2007, April 27). With the lease payment of $42,000 and the IRA’s of $10,000, John will have deductions of $52,000 against the $300,000 and an additional deduction of paying half of the self employment tax.

The state government of Gujarat proposed a massive project to the central government of India in the year 2010. The project was to build the biggest solar park in Asia. The project was approved and the project is in commission from the year 2012. This project is part of many planned projects that would help the country achieve its 2020 green goal.

American Eagle Outfitters Inc. uses straight-line method to find depreciation of plant and property. The estimated useful lives of its buildings is at 25 years while its leasehold improvements and fixtures and equipment have estimated useful lives of lesser of 10 years or the term of the lease and 5 years, respectively. The cost of property and equipment for the fiscal year ending February 1, 2014 was $1,594,360,000 and its book value was $632,986,000. For the fiscal year ending January 31, 2015, the cost was $1,684,709,000 and the book value was $694,856,000. The depreciation expense trend for the past three years was generally upwards. While depreciation expense decreased by $5,995,000 from fiscal year 2013 to fiscal year 2014, it increased by $15,768,000 from fiscal year 2014 to fiscal year 2015.

Net initial investment: $8.25 million. The total cash payment is offset by the after-tax proceeds from the sale of the existing spinning machine.

After calculating that 20 solar panels were needed on a home on Chaparral Drive we were able to find the cost for 42 homes. We used the MACRS Depreciation chart for personal property for 20 years, because that is average lifespan of a solar panel. After, we were able to find our taxable income based off the cost of the solar panel. After calculating our taxable income, we were able to find how much the solar panel would be taxed based on a corporate income tax rate. Finally, this

v. As of December 31, 2003 the amount of the Capital Lease liability that is current equals $8.47 (the amount by which the principal will be reduced). This estimate differs from “current maturities of capital leases” because current maturities ($25) represent leases that will be retired during 2004. The payment of $44 is to the portfolio of all leases and therefore reflects the interest and principal portions in terms of all of the leases. The amount that actually went to interest and principal cannot be determined without accounting for each lease individually.

deprecation. The tax depreciation rate for this type of plant is 25%. The company tax rate is