Question number 37 c. Determine the amount of the investment in new technology that would make the two alternativesequivalent.1KAK S -SM -MAR USection 10.6What is the difference or distinction being made when we speak of before-tax cash flows and before-tax and loancash flows. Be precise in your answer.37. Abbott placed into service a flexible manufacturing cell costing $850,000 early this year for production of theiranalytical testing equipment. Gross income due to the cell is expected to be $750,000 with deductible expenses of$475,000. Depreciation is based on MACRS-GDS, and the cell is in the 7-year property class, calling for adepreciation percentage of 14.29 percent, or $121,465, in the first year. Half of the cell cost is financed at 11 percentwith principal paid back in equal amounts over 5 years. The first year's interest is therefore $46,750, while theprincipal payment is $85,000.Determine the taxable income for the first year.WILEY OGO- MRsiLC uJI AIKV Vi I LmA el T aа.b. Determine the tax paid due to the cell during the first year using a 40 percent marginal tax rate.. DePavaDetermine the after-tax cash flow for the first year.HA HA aс.E a Kt38. Hyundai USA has numerous robotic welders and checkers with vision. One underbody robotic welder wasinstalled and is increasing productivity by 2.5 percent in one area. The result is a savings of $500,000 per year.Deductible expenses other than depreciation and interest associated with the installed robotic welder are only$120,000. Depreciation is $171,480 this year. Interest on borrowed money is $60,500, and no principal is paid backthis year.a scaLw a nyivEKO S Uа.Determine the taxable income for the year.aF .CA , AIRAOb. Determine the income tax for the year assuming a marginal tax rate of 40 percent.n H M Ethefton toy oogh Aow, for the

Taxable income is the amount on which the tax is to be paid. It is the amount after considering all…

Abbott placed into service a flexible manufacturing cell costing $850,000 early this year for production of their analytical testing equipment. Gross income due to the cell is expected to be $750,000 with deductible expenses of $475,000. Depreciation is based on MACRS-GDS, and the cell is in the 7-year property class, calling for a depreciation percentage of 14.29 percent, or $121,465, in the first year. Half of the cell cost is financed at 11 percent with principal paid back in equal amounts over 5 years. The first year's interest is therefore $46,750, while the principal payment is $85,000. a. Determine the taxable income for the first year. b. Determine the tax paid due to the cell during the first year using a 40 percent marginal tax rate. c. Determine the after-tax cash flow for the first year.

Abbott placed into service a flexible manufacturing cell costing $850,000 early this year for production of their analytical testing equipment. Gross income due to the cell is expected to be $750,000 with deductible expenses of $475,000. Depreciation is based on MACRS-GDS, and the cell is in the 7-year property class, calling for a depreciation percentage of 14.29 percent, or $121,465, in the first year. Half of the cell cost is financed at 11 percent with principal paid back in equal amounts over 5 years. The first year's interest is therefore $46,750, while the principal payment is $85,000. a. Determine the taxable income for the first year. b. Determine the tax paid due to the cell during the first year using a 40 percent marginal tax rate. c. Determine the after-tax cash flow for the first year.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter12: Capital Investment Decisions

Section: Chapter Questions

Problem 52P

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