A flour mill is considering buying a new jumbo sifter, which would have an installed cost of $80,000. The new one would replace the existing sifter that was purchased 3 years ago at an installed cost of $60,000. If the company moves forward with the replacement, it could sell the old sifter for $19,000. Purchasing the new sifter would result in the company's current assets increasing by $10,000 and current liabilities increasing by $8,000. The company uses the 5-year MACRS table for depreciation and is taxed at 21%. a) What is the accumulated depreciation of the old sifter? b) What is the current book value of the old sifter? c) What is the amount of depreciation recapture/recovery? d) What is the tax on the sale of the old sifter? e) What are the after-tax proceeds from the sale of the old sifter? f) What is the change in Net Working Capital? g) What is the initial investment for the project? Please answer a) - d). Asnwers in Excel
A flour mill is considering buying a new jumbo sifter, which would have an installed cost of $80,000. The new one would replace the existing sifter that was purchased 3 years ago at an installed cost of $60,000. If the company moves forward with the replacement, it could sell the old sifter for $19,000. Purchasing the new sifter would result in the company's current assets increasing by $10,000 and current liabilities increasing by $8,000. The company uses the 5-year MACRS table for
a) What is the accumulated depreciation of the old sifter?
b) What is the current book value of the old sifter?
c) What is the amount of depreciation recapture/recovery?
d) What is the tax on the sale of the old sifter?
e) What are the after-tax proceeds from the sale of the old sifter?
f) What is the change in Net Working Capital?
g) What is the initial investment for the project?
Please answer a) - d). Asnwers in Excel
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
