$500,000 was invested in depreciable property to obtain before-tax annual revenues of $108,333.33 each of the following 9 years and $158,333.33 the 10 year. Now suppose the expenditure is on a consulting study that identifies cost-saving opportunities that will produce the same BTCF. With a 25% income-tax rate and an after-tax MARR of 10%, what will be the after-tax measures of economic worth for the investment?

Q: A high-precision programmable router for shaping furniture components is purchased by Henredon for…

A: Purchase price = $190,000 Expected life = 12 years  Salvage value = $5,000

Q: A firm must decide between two designs. Their effective income tax rate is 22%, and MACRS…

A: The annual worth is calculated using the following formula:- Annual Worth (AW )=NPVPVAF(r%,n)   Step…

Q: A corporation expects to receive $32,000 each year for 15 years from the sale of a product. There…

A: Rate of return is the annual income in percentage earned from an investment.

Q: A lessor made an investment of ₱550,000 in equipment with an expected life of 5 years. He expects…

A: The NPV is calculated as difference of present value of cash inflows and initial investment

Q: Consider an asset that costs $665,000 and is depreciated straight-line to zero over its nine-year…

A: Calculation of after cash flow from sale of asset:The after-cash flow from sale of asset is…

Q: Consider a piece of equipment that initially cost $8,000 and has these estimated annual expenses and…

A: The table below shows the after tax total cost Approximation after tax total cost=…

Q: The initial cost of a project is 1000 monetary units, its useful life is 5 years and the scrap value…

A: Gross income can be defined as the difference between the revenues earned by selling the product and…

Q: A machine costs 100,000 and is subject to a depreciation rate of 25 percent under the WDV method.…

A: In WDV is written down value method in which depreciation is more in the initial years.

Q: Hammer Corporation wants to purchase a new machine for $303,000. Management predicts that the…

A: Accounting (book) rate of return (ARR)ARR is useful to calculate investment profitability quickly.…

Q: A high-precision programmable router for shaping furniture components is purchased by Henredon for…

A: Present worth is the difference between the present value of cash inflows and the present value of…

Q: Jellibean Corporation will replace one of its existing assets with a newer type. The existing asset…

A: Cost of old asset = $30,000 Selling price of existing cost = $25,000 Cost of new asset = $75,000…

Q: Your company is considering a new project that will require $10,000 of new equipment at the start of…

A: The present value is the value of the sum received at time 0. It is the current value of the sum…

Q: A project has a first cost of S120,000 and an estimated salvage value of $20,000 at the end of 25…

A: Year Cash Flow Reference 0 -120,000 First Cost 1 -41580 Annual Receipts - Annual Disbursement -…

Q: Macaron Corporation is making a $96,400 investment in equipment with a 5-year life. The company uses…

A: Lets understand the basics. Depreciation is a reduction in value of asset due to wear and tear…

Q: Last year, Blue Lake Mines, Inc., had earnings after tax of $550,000. Included in its expenses were…

A: Given Earnings after Tax = $550,000 Depreciation = $240,000 Deferred Taxes =$110,000 Purchase of new…

Q: A corporate expects to receive $34,442 each year for 15 years if a particular project is undertaken.…

A: Initial investment (X) = $114290 Annual cash inflow = $34442 Annual expenses = $7570 Depreciation =…

Q: company is considering a new project whose data are shown below. The required equipment has a 3-year…

A: Cost of equipment = $70000 Depreciation for year 4 = $70000×7% = $4900

Q: A property is sold for $7,600,000 and the mortgage balance at the time of sale is $3,600,000. The…

A: Depreciation recapture- It is a tax provision that powers the IRS to collect taxes on any profitable…

Q: A high-precision programmable router for shaping furniture components is purchased by Henredon for…

A: ATCF are the cash flows in which tax has been deducted.

Q: An investment of $450,000 is made in equipment that qualifies as 5-year equipment for MACRS-GDS…

A: Planning horizon is the time period for which investor will invest the amount in an investment. With…

Q: Fort requires equipment costing $320,000.  It is a  9-year project, and is depreciated straight line…

A: cost of equipment= $320,000 life span of the project= 9 years  Sales generated= $189,000  cost=…

Q: The Hills Company, a calendar year company, purchased a new machine for P280,000 on January 1.…

A: Solution: Annual net income from investment = Investment amount * ARR = P280,000 * 15% = P42,000

Q: A firm has recently purchased Class 10 equipment for $100,000 with a CCA rate of 30%. What is the…

A: "Since you have asked multiple questions, we will solve the first question for you". If you want any…

Q: Consider an asset that costs $422,400 and is depreciated straight-line to zero over its 8- year tax…

A: Given, Asset cost = $422,400 Selling Price = $52800 Tax rate = 24%

Q: Your new employer, Freeman Software, is considering a new project whose data are shown below. The…

A: Cash flow for a particular project is the cash revenues generated by business reduced by the cash…

Q: Consider an asset that costs $311,000 and is depreciated straight-line to zero over its six-year tax…

A: Given: Cost of asset =$311,000 Life =  6 years Used life = 4 years Salvage value = $58,000

Q: A company is considering a new project whose data are shown below. The required equipment has a 3-…

A: Given information, Sales =$52,000 Equipment cost =$70,000 Operating costs=$25,000 Tax rate =35%

Q: Six years ago, ABC Company invested $45,525 in a new machinery. The investment in net working…

A: The selling price for the machine is $19,722.The book value of the machine is $12,039.The gain made…

Q: A property is sold for $6,200,000 and the mortgage balance at the time of sale is $3,600,000. The…

A: Depreciation recapture- It is a tax provision that powers the IRS to collect taxes on any profitable…

Q: Crane Corp. management is considering purchasing a machine that will cost $117,250 and will be…

A: Working Note #1 Calculation of depreciation: Cost of machine = $117,250 Useful life = 5 years…

Q: Complete the last four columns of the table below using an effective tax rate of 40% for an asset…

A: Exercise 4 : Tax is that the obligatory payment that individual and corporation got to pay to the…

Q: This question is based on the following in formation: An investment is Machinery costing P 250,000…

A: Annual tax shield will the tax saved on depreciation of assets. Annual Depreciation =(Cost of…

Q: A corporation expects to receive $32,000 each year for 15 years from the sale of a product. There…

A: Purpose of every investment is to get return. Return means extra amount received over the invested…

Q: A two-year project has sales of $582,960, cash costs of $411,015, and depreciation expense of…

A: Depreciation expense = $68,109 Tax rate = 0.24   Depreciation tax shield is also known as saving of…

Q: As a member of UA Corporation's financial staff, you must estimate the Year 1 cash flow for a…

A: Operating cash flow of the project helps in understanding if the business is able to generate…

Q: A project has sales of $462,000, costs of $274,000, depreciation of $28,000, interest expense of…

A: Given: Sales =$462000Cost =$274000Depreciation =$28000Interest expense =$3400Tax rate =35%

Q: Karsted Air Services is now in the final year of a project. Theequipment originally cost $29…

A: Salvage value is the value of an asset at the end of its life. It can be calculated by deducting the…

Q: An asset with a first cost of $250,000 and a 5-year recovery period is subject to MACRS…

A: Answer has been given in the next sheet.

Q: A highly specialized piece of equipment has a first cost of $50,000. If this equipment is purchased,…

A: Capital budgeting is the selecting methods of financing long-term project.

Q: A corporate expects to receive $37,399 each year for 15 years if a particular project is undertaken.…

A:

Q: A corporate expects to receive $35,900 each year for 15 years if a particular project is undertaken.…

A: Net present worth (or net present value) is a capital budgeting approach that evaluates the…

Q: as invested $50,000 in equipment with a 5-year useful life. The machinery will have a salvage value…

A: IRR stands for Internal rate of return refers to the concept that evaluates the profitability factor…

Q: An asset was purchased for P66,000. The asset is expected to last for 6 years and will have a…

A: Accounting rate of return(ARR), one of the techniques of capital budgeting is defined as the…

Q: The $500,000 investment in the surface-mount placement (SMP) machine in an electronics manufacturing…

A: If the salvage value of an asset is adjusted for the tax rate then it is known as after- tax salvage…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.