A machine costs £16,000 and has a 5-year life. The required rate of return is 10%. By how much can taxable profit be reduced through the writing-down allowance (WDA) in the third year, if the annual WDA is 30% on a declining balance? £ (Round your answer to the nearest pound.) If the tax rate is 40%, what is the present value of the WDA in year 4 to the machine's owners? (Round your answer to two decimal places.) If the machine has a scrap value of £1,600 after 5 years, what will be the fifth year's adjustment to the WDA? (Round your answer to the nearest pound.)

A machine costs £16,000 and has a 5-year life. The required rate of return is 10%. By how much can taxable profit be reduced through the writing-down allowance (WDA) in the third year, if the annual WDA is 30% on a declining balance? £ (Round your answer to the nearest pound.) If the tax rate is 40%, what is the present value of the WDA in year 4 to the machine's owners? (Round your answer to two decimal places.) If the machine has a scrap value of £1,600 after 5 years, what will be the fifth year's adjustment to the WDA? (Round your answer to the nearest pound.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 3P

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