A company is evaluating a new 4-year project. The equipment necessary for the project will cost $2,950,000 and can be sold for $660,000 at the end of the project. The asset the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent and 11.52 percent, respectively. The company's tax rate is 35 percent. What is the aftertax salvage value of the equipment?

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A: The value of depreciation tax shield can be calculated as depreciation multiplied by tax rate.

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Q: Your company is considering a new project that will require $10,000 of new equipment at the start of…

A: The present value is the value of the sum received at time 0. It is the current value of the sum…

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A: The computation is done as shown:

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A:

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A: Net Present Value: It is the difference  between the current worth of money inflows  and outflows…

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A: NPV is the difference between present value of all cash inflow minus present value of all cash…

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A: Project fixed assets cost = $165,000 Life of assets = 8 Years Tax rate = 34%

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Q: A project requires an initial investment of $150,000, to be depreciated straight-line over 3 years…

A: NPV computes the existing value of future benefits by discounting future worth with a stated…

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A: Annual depreciation =(Cost-Salvage value)/Useful Life =(10000-3000)/5 =$1400/year

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A: Given information, Sales =$52,000 Equipment cost =$70,000 Operating costs=$25,000 Tax rate =35%

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A: Annual Depreciation=Cost of Asset-Salvage ValueDepreciable Life

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A: Formulas:

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A:

Q: Your firm needs a machine which costs $210,000, and requires $36,000 in maintenance for each year of…

A: Computation of tax shield on depreciation: Depreciation=Cost of asset×Depreciation rate for year…

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A: Rate of return is determined by dividing the net profit after tax by the total amount invested.  The…

Q: Enterprises is considering a new 3-year expansion project that requires an initial fixed asset…

A:

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.