First cost of equipment = $200,000 Market value at the end of year 6 = $10,000 MACRS depreciation is used. The equipment is a 5-year property. Incremental income-tax rate for the company = 35% Year 0 1 2 3 4 5 6 BT-CF in $ -200K 60K 63K 66K 69K 72K 75K Market value = 10K The first-year after tax-cash flow is equal to _____________.

First cost of equipment = $200,000 Market value at the end of year 6 = $10,000 MACRS depreciation is used. The equipment is a 5-year property. Incremental income-tax rate for the company = 35% Year 0 1 2 3 4 5 6 BT-CF in $ -200K 60K 63K 66K 69K 72K 75K Market value = 10K The first-year after tax-cash flow is equal to _____________.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 2E

See similar textbooks

Similar questions

Solve correctly in excel Six years ago, a company purchased $30,000 of equipment. The equipment has just been sold for $5000. The equipment was depreciated using 50% bonus depreciation / 50% MACRS (using a 5-year recovery period). The actual savings due to the purchase of the equipment is shown below. The firm's MARR is 12% and it's tax rate is 25%. What is the after-tax present worth of the investment? Year 1 2 3 4 5 6 Savings 5000 6000 7000 7000 4000 3000
A corporate expects to receive $36,144 each year for 15 years if a particular project is undertaken. There will be an initial investment of $100,705. The expenses associated with the project are expected to be $7,740 per year. Assume straight-line depreciation, a 15-year useful life, and no salvage value. Use a combined state and federal 48% marginal tax rate, MARR of 8%, determine the project's after-tax net present worth.
Given: 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%
Omar Shipping Company bought a tugboat for $75,000 (year 0) and expectedto use it for five years after which it will be sold for $12,000. Suppose the companyestimates the following revenues and expenses from the tugboat investmentfor the first operating year:Operating revenue $200,000Operating expenses $8400Depreciation $4000 If the company pays taxes at the rate of 30% on its taxable income, what is the net income during the first year?
6. The equipment bought at a price of Php 450,000 has an economic life of 5 years and a salvage value of Php 50,000. The cost of money is 12% per year. Compute the first-year depreciation using Declining Balance Method.
An asset with a first cost of $9000 is depreciated using 5-year MACRS recovery. The CFBT is estimated at $10,000 for the first 4 years and $5000 thereafter as long as the asset is retained. The effective tax rate is 40%, and money is worth 10% per year. In present worth dollars, how much of the cash flow generated by the asset over its recovery period is lost to taxes?
An industrial plant bought a generator set for P120, 000. Other expenses including installation amounted to P10, 000. The generator is set to have a life of 15 years with a salvage value at the end of life of P8, 000. What is the depreciation charge during the 12th year by SYD method? pls show manual solution and pick the right answer thank you a. P 3, 105 b. P2,620 c. P4,067 d. P 4,784
Perform an after-tax cash flow analysis on the following data on the replacement of an old equipment with a more energy-afficient version. Use an effective tax rate of 30% and the straight-line method for depreciation. Initial Investment: 500,000Useful life: 5 yearsTerminal Value: 50,000Annual Revenues, 240,000 Annual Expenses Power: 75,000Maintenance: 25,000Property Insurance: 20,000 1. If the after-tax MARR is 6%, what is the net present worth (in pesos) of replacing the old equipment? (2 decimal places) 2. After evaluation, is the replacement of the old equipment economically feasible?
A company paid $200,000 for a machine to make a new product. The machine has a 5 year life and a salvage value of $20,000. The company makes $49,500 per year on the new product. Assuming a 31% tax rate and straight-line depreciation, what is the before tax and after tax rates of return on the investment over its 5 year life? (Do not interpolate. Round to the closest rate in appendix C of the book). And Please show work and also post on excel sheet
4. Last month, a company specializing in wind power plant design and engineering made a capital investment of $460,000 in physical simulation equipment that will be used for at least 5 years, then sold for approximately 30% of the first cost. By law, the assets are MACRS depreciated using a 3-year recovery period. By how much will the sale cause TI and taxes to change in year 5? The TI will increase by $ and the taxes will increase by
1 1- If an after-tax rate of return = 10% is required and the Effective tax rate is 35%. What is the estimated MARR for before tax economic analysis. Select one: a. 19.4 % b. 15.4 % c. 17.4 % d. 13.4 % --------------------------------- 2- An alternative has the following cash flows: Benefits of $30,000 per year, Disbenefits of $14,000 per year, Initial cost of $300,000 and M&O costs of $10,000 per year. If the alternative has an infinite life and the interest rate is 10% per year, the B/C ratio is closest to: Select one: a. 0.32 b. 0.40 c. 0.80 d. 0.70 -------------------------- 3-At the end of the useful life of a piece of equipment, the asset accounts for $45,000 worth of production and has an operating cost of $25,000. The equipment has a salvage value of $15,000. The net cash flow in the final year of use is: Select one: a. - $8000 b. $ 25000 c. $ 15000 d. $ 35000 --------------------------
A company wants to set up a new office in an area with a corporate tax rate as follows: 15% of the first $50,000 25% of the next $25,000 34% of the next $25,000 39% for anything over It is estimated that they will have gross revenues of $500,000, total costs of $300,000, $30,000 in allowable deductions, and a one-time start up credit of $8,000. What is the taxable income for the first year, and how much should the company expect to pay in taxes?