[5] Garrison Corporation is considering the replacement of an old machine that is currently being used. The old machine has a book value of $28,000. If Garrison decides to replace the old machine, Picco Company has offered to purchase it for $60,000 on the replacement date. Garrison has a tax rate of 40%. What is the after-tax cash flow associated with the salvage of the old machine?
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- Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?Garrison Corporation is considering the replacement of an old machine that is currently being used. The old machine has a book value of $28,000. If Garrison decides to replace the old machine, Picco Company has offered to purchase it for $60,000 on the replacement date. Garrison has a tax rate of 40%. What is the after-tax cash flow associated with the salvage ofthe old machine? A. $32,000B. $36,000C. $47,200D. $40,80014) Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $11.2 million, of which 75% has been depreciated. The used equipment can be sold today for $3.2 million, and its tax rate is 25%. What is the equipment's after-tax net salvage value? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar. ________$
- 2. The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $302,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $184,000and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. a. What is the book value of the equipment? The book value of the equipment after the third year is $____ (Round to the nearest dollar.) b. If Jones sells the equipment today for $184,000 and its tax rate is 21%, What is the after-tax cash flow from selling it? The total after-tax proceeds from the sale will be $____ (Round to the nearest dollar.)Genesis Corporation want to purchase a piece of machinery for $150,000 that will cost $20,000 to have it delivered and installed. Based on past information, they believe they can sell the machinery for $25,000 in 5 years. The company’s marginal tax rate is 34%. If the applicable CCA rate is 20% and the required return on this project is 15%, what is the present value of the CCA tax shield?Regal Industries is replacing a grinder purchased 5 years ago for $15,000 with a new one costing $25,000 cash. The original grinder is being depreciated on a straight-line basis over 15 years to a zero salvage value. Regal will sell this old equipment to a third party for $6,000 cash. The new equipment will be depreciated on a straight-line basis over 10 years to a zero salvage value. Assuming a 40% marginal tax rate, Regal’s net cash investment at the time of purchase if the old grinder is sold and the new one is purchased is (M) * A. $19,000 B. $15,000 C. $17,400 D. $25,000
- Sub-Prime Loan Company is thinking of opening a new office, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new office. Under the new tax law, the equipment used in the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. At the end of the project’s life, the equipment would have zero salvage value. No change in net operating working capital (NOWC) would be required for the project. Revenues and operating costs would be constant over the project's 3-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.) Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC 10.0% Opportunity cost $100,000 Equipment cost) $65,000 Annual sales revenues $116,000 Annual operating costs $25,000 Tax rate 25.0% Question options: $20,978…Karsted Air Services is now in the final year of a project. The equipment originally cost $24 million, of which 100% has been depreciated. Karsted can sell the used equipment today for $10 million, and its tax rate is 20%. What is the equipment's after-tax salvage value? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar.The Golden Corporation is considering selling one of its old assembly machines. The machine, purchased for $30,000 3 years ago, had an expected life of 6 years and an expected salvage value of zero. Assume Evans uses simplified straight-line depreciation and could sell this machine for $8,000. Also assume Evans has a 34 percent marginal tax rate. What would be the taxes associated with this sale?