An asset used in a four-year project falls in the five-year MACRS class (MACRS schedule) for tax purposes. The asset has an acquisition cost of $8,600,000 and will be sold for $2,180,000 at the end of the project. If the tax rate is 23 percent, what is the aftertax salvage value of the asset? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.

An asset used in a four-year project falls in the five-year MACRS class (MACRS schedule) for tax purposes. The asset has an acquisition cost of $8,600,000 and will be sold for $2,180,000 at the end of the project. If the tax rate is 23 percent, what is the aftertax salvage value of the asset? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter7: Deductions And Losses: Certain Business Expenses And Losses

Section: Chapter Questions

Problem 28CE

See similar textbooks

Similar questions

6.10 Calculating Salvage Value An asset used in a 4-year project falls in the 5-year MACRS class for tax purposes. The asset has an acquisition cost of $7.6 million and will be sold for $1.4 million at the end of the project. If the tax rate is 21 percent, what is the after tax salvage value of the asset?
Problem 9-9 Calculating Project OCF [LO 2] Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2,950,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $3,190,000 in annual sales, with costs of $2,210,000. If the tax rate is 21 percent, what is the OCF for this project?
Ch 6. Seeing Red has a new project that will require fixed assets of $935,000, which will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company has a tax rate of 28 percent. What is the depreciation tax shield for Year 3? Round to the nearest cent and format answer as "XX,XXX.XX"
Ch. 6. Pencil and Paper, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.37 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which it will be worthless. The project is estimated to generate $1,255,000 in annual sales, with costs of $435,000. The tax rate is 21 percent and the required return is 10 percent. What is the project’s NPV? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Format as "XXX,XXX.XX"
Problem 10-13 Calculating Project OCF (L03) Hubrey Home Inc. is considering a new three - year expansion project that requires an initial fixed asset investment of $41 million. The fixed asset falls into Class 10 for tax purposes (CCA rate of 30% per year), and at the end of the three years can be sold for a salvage value equal to its UCC The project is estimated to generate $ 2,670,000 in annual sales, with costs of $846,000. If the tax rate is 35% what is the OCF for each year of this project? (Enter the answers in dollars. Do not round your intermediate calculations. Round the final answers to 2 decimal places. Omit S sign in your response.) OCH OCF2 OCT
7.2 Project Beta is a 6-year project which requires an initial outlay of $4,000. This outlay will be depreciated using straight-line depreciation over the life of the project. It will generate incremental revenue of $2000 per year and incremental costs (excluding depreciation) of $500. The tax rate is 30%. What is the annual depreciation amount? a. $867 b. $667 c. $1533 d. $1333 Clear my choice
Oo.73. Subject :- Finance An waste management company is intent to make an investment of $10,100, that can produce an annual revenue of $5,310 for seven years. An annual additional return is $3,000 at the end of each year for operating and maintaining the project. After the seven years, company has to cede working, and goverment will undertake the company. At the return rate of 0.7%, what is the Net Present Value ? NB: Use xx.xxxx (four decimals) format to anser the question. *the excel formula and tables if necesarry
7.3 q3 A project requires an increase of $1800 in Net Working Capital at the beginning of the project, which will be fully recovered after the completion of the project. Equipment with a book value of $11,000 will be sold at the end of the project for a salvage value of $5,000. The tax rate is 20%. What is the incremental free cash flow in the year following the end of the project? a. $2000 b. $5600 c. $8000 d. $4400
7.2 Project Beta is a 6-year project which requires an initial outlay of $4,000. This outlay will be depreciated using straight-line depreciation over the life of the project. It will generate incremental revenue of $2000 per year and incremental costs (excluding depreciation) of $500. The tax rate is 30%. What is the project's annual tax payable? a. $50 b. $583 c. $250 d. $117 Clear my choice
shj.8 A company is considering the purchase of a new production machine and is not sure whether the project fulfills its investment objective. The company requires that all investments must have a positive net present value (NPV). The machine costs $100,000 and will be depreciated for tax purposes on a straight-line basis over its useful life of five years. The machine has a $0 salvage value. The project will generate $30,000 of pretax operating cash inflow annually. The company has a 25% effective income tax rate and uses a 10% discount rate for investment projects. Which of the following represents the NPV of the project? Select one: a. $(14,707) b. $(33,661) c. $13,724 d. $4,246
Q) 1 Blatt Packing Co. is examining the investment in a new air-conditioning system in its factory. The initial cost is £100,000, and it is expected to sell the system for scrap after five years at a salvage value of £20,000. The equipment will be depreciated on a straight-line basis for tax purposes. The tax rate is 40 per cent, with no tax payable on the salvage value. The investment requires an increase in net working capital of £5,000 at the outset. There is no increase in revenues expected, but there is expected to be a saving of £40,000 per year in before-tax operating costs. a. Estimate the cash flows involved in the project. b. If the firm’s cost of capital is 8 per cent, should the firm invest in the system? c. How would the decision above be affected if the firm’s bond rating was reduced and its cost of capital changed to 10 per cent?
7.3 q2 Equipment with a book value of $11,000 will be sold at the end of a project for a salvage value of $8,000. The tax rate is 30%. What is the tax effect resulting from the profit or loss from the sale of the equipment (where a negative number means tax is payable and a positive number means that there is a tax shield)? a. $-900 b. $900 c. $-3300 d. $3300