Approximate the after-tax ROR on a project that had a first cost of $500,000, a salvage value of 19% of the first cost after five years, and an annual CFBT of $235,000. Assume the company had a 28% effective tax rate. The after-tax ROR is 37.40 %.
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- A firm has the opportunity to invest in a project having an initial outlay of $20,000. Net cash inflows (before depreciation and taxes) are expected to be $5,000 per year for five years. The firm uses the straight-line depreciation method with a zero salvage value and has a (marginal) income tax rate of 40 percent. The firms cost of capital is 12 percent. Compute the IRR and the NPV. Should the firm accept or reject the project?A company with a 34% marginal income tax rate is considering the purchase of a $75,000 piece of equipment that is classified as 3-year property in the MACRS depreciation schedule. The equipment will provide the following estimated benefits in Year 1-5. Year Before-Tax Cash Flow 0 −$75,000 1 $10,000 2 $25,000 3 $50,000 4 $15,000 If the company purchases the equipment, how much income tax will it owe in Year 3? Group of answer choices $13,223 $17,000 $25,500 No income tax is owedPlant Company is contemplating the purchase of a new piece of equipment for $40,000. Plant is in the 20% income tax bracket. Predicted annual after-tax cash inflows from this investment are $14,000, $12,000, $5,000, $13,000 and $1,000 for years 1 through 5, respectively. The firm uses straight-line depreciation with no residual value at the end of five years. The hurdle rate for accepting new capital investment projects is 4%, after-tax. The estimated accounting rate of return (ARR) on this project (rounded to two decimal points), based on the initial investment is: Multiple Choice 2.50%. 3.16%. 6.50%. 9.83%. 11.83%.
- has a cost of $53,600, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3-year property class. Investment B has a cost of $84,500.00, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B, however, is in the 7-year property class. The company marginal tax rate is 25%, and MARR is an after-tax 10%. Based upon the use of MACRS-GDS depreciation, compare the AW of each alternative.AWA = $enter a dollar amount AWB = $enter a dollar amount Which should be selected? What must be Investment B's cost of operating expenses for these two investments to be equivalent? $enter a dollar amountGiven: Before -Tax Cash Flow (BT-CF) for Kal Tech Systems in 2012 for an equipment that will be depreciated using the SL method with salvage value of $10,000. Year 0 1 2 3 4 5 BT-CF -$120,000 32,000 32,000 32,000 32,000 32,000 Market value - $36,000 What is the after-tax return if the company is in the 34% income tax bracket? The incremental tax rate is 34%. Also, it is known that the before-tax return is 16.65% Group of answer choices 9.65% 11.29% 10.16% 10.99%Olivia’s asset is purchased for Php 25,000. Its estimated life is 12 years after which it will be sold for Php 15,000. Find the depreciation for the 5th year and book value at the end of 8th year using Straight Line Method. a. 833.33 - 18,333.36 b. 833.33 - 4,166.67 c. 4,166.67 - 18,333.36 d. 533.33 - 4,166.67
- An asset that is book-depreciated over a 5-year period by the straight line method has C3 = P 2,800,000 with a depreciation charge of P1,170,000 per year. Using straight line method what is the assumed salvage value? a) P 250,050 b) P 350,020 c) P 587,000 d) P 460,000The UST-ECE Department purchased a Communications Trainer worth P 250,000. Freight and insurance charges amounted to P 18,000; customs’, cargo and broker’s fee, P 8,500; taxes, permits, and other expenses, P 25,000. If the estimated life of the trainer is 10 years with a salvage value at the end of life of P 20,000 Using SYDM: The depreciation charge during the 4th year is: P 31,745.65 B. P 174,018.18 C. P 31,818.18 D. P 35,827.27 The book value at the end of 6 years is: P 61,818.18 B. P 59,201.53 C. P 71,181.82 D. P 96,772.73Consider the following information for year 1 of a project using equipment that had an initial cost of $100,000, and an estimated salvage value of $10,000 at disposal: BTCF = $16,000MACRS 10-year property classState & Federal Combined Income Tax Rate: 45% What is the ATCF for year 1?
- If the after-tax rate of return for a cash flow series is 11.2% and the corporate effective tax rate is 39%, the approximated before-tax rate of return is closest to: (a) 6.8% (b) 5.4% (c) 18.4% (d ) 28.7%The first costs of an equipment is P 65,000 and a salvage value of X at the end of its life of 7 years. Find the value x if using Straight Line Method, the total depreciation after 3 years is P 26,571.43. a. P 3,000 b. 0 c. P 4,000 d. P 5,000A corporation in 2018 expects a gross income of $680,000, total operating expenses of $480,000, and capital investments of $29,000. In addition the corporation is able to declare $53,000 of depreciation charges for the year. The federal income tax rate is 21%. What is the expected taxable income and total federal income taxes owed for the year 2018?