Required information Problem 17.037 DEPENDENT MULTI-PART PROBLEM - ASSIGN ALL PARTS Determine the amount of any depreciation recapture (DR), capital gain (CG), or capital loss (CL) generated by each event described below. Use the result to determine the income tax effect, if Te=31.5%. Problem 17.037.c: Determine the amount of depreciation recapture as well as taxes generated A Modified Accelerated Cost Recovery System (MACRS)-depreciated asset with a 7-year recovery period was sold after 8 years at an amount equal to 10% of its first cost of $135,000. The amount of depreciation recapture (DR) generated is determined to be $ The amount of taxes generated is determined to be $

Required information Problem 17.037 DEPENDENT MULTI-PART PROBLEM - ASSIGN ALL PARTS Determine the amount of any depreciation recapture (DR), capital gain (CG), or capital loss (CL) generated by each event described below. Use the result to determine the income tax effect, if Te=31.5%. Problem 17.037.c: Determine the amount of depreciation recapture as well as taxes generated A Modified Accelerated Cost Recovery System (MACRS)-depreciated asset with a 7-year recovery period was sold after 8 years at an amount equal to 10% of its first cost of $135,000. The amount of depreciation recapture (DR) generated is determined to be $ The amount of taxes generated is determined to be $

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 1E: A firm has the opportunity to invest in a project having an initial outlay of $20,000. Net cash...

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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?
Lynn Construction Company had a gross income of $34,000,000 in tax-year 1,$5,000,000 in salaries, $4,000,000 in wages, $1,000,000 in depreciation expenses, a loan principal payment of $200,000, and a loan interest payment of $210,000.(a) What is the marginal tax rate for Lynn Construction in tax-year 1?(b) What is the average tax rate in tax-year 1?(c) Determine the net income of the company in tax-year 1.
You are building guest huts at a holiday resort, and you need to choose whether to build your huts out of straw, wood, or brick. Straw is the cheapest but depreciates the most quickly; brick is the most expensive but depreciates least; wood is intermediate. Assume that all types of huts are equally picturesque/functional. They differ only in terms of durability. The cost (and depreciation rates) of the different hut types is: - Brick: £3,500 (10% depreciation) - Wood: £3,000 (15% depreciation) - Straw: £2,500 (20% depreciation) a) The interest rate is 5%, which type of hut should you buy? b) The interest rate is 20%, which type of hut should you buy? c) Intuitively, why were the answers for parts (a) and (b) different? Explain in words.
Suppose for some year the income of a small company is $110,000; the expenses are $65,000; the depreciation is $25,000; and the effective income tax rate = 40%. For this year, the ATCF is most nearly (a) −$8,900 (b) $4,700 (c) $13,200 (d) $29,700 (e) $37,000.
Suppose that you placed a commercial building (warehouse) in service inJanuary. The cost of property is $300,000, which includes the $100,000 value of land. Determine the amount of depreciation that is allowed during the first year of ownership.(a) $7,692(b) $5,128(c) $7,372(d)$4,915
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 owed
Show the solutions in a step-by-step manner. 1. A certain building has a salvage value of P1,000,000 after 40 years. Annual depreciation is P2,000,000. Using the Straight Line Method, how many years should you sell the building for P30,000,000? 2. A machine costs P2,500,000. At the end of its economic life of six years, its salvage value is P800,000. Using the Sum of the Years Digit Method of Depreciation, what will be its book value for the first year? Prepare a depreciation schedule. plz answer dont answer by pen paper
In tax year 1, an electronics-packaging firm hada gross income of $35,000,000, $6,000,000 in salaries, $7,000,000 in wages, $800,000 in depreciationexpenses, a loan principal payment of $200,000, anda loan interest payment of $150,000. Determine thenet income of the company in tax year 1
Calculate Lopez Enterprises' gross profit at a CFAT of $2.5 million, $900,000 in expenses, $900,000 in depreciation costs, and a 26.4% effective tax rate.
A 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?
5. The first cost of a machine is Php 1,800,000 with a salvage value of Php 300,000 at the end of its six years of life. Determine the total depreciation after three years using the Straight Line Method of Depreciation.
Shell Philippines, a multinational company, developed an oil well which is estimated to contain 5,000,000 barrels of oil at an initial cost of $50,000,000. What us the depletion charge during the year where it produces half million barrels of oil.