Talia’s Tutus bought a new sewing machine for $50,000 that will be depreciated over 5 years using double-declining-balance depreciation with a switch to straight-line. Required: a. Find the depreciation charge each year. b. If the sewing machine is sold after 4 years for $20,000, what will be the after-tax proceeds on the sale if the firm’s tax bracket is 35%?
Talia’s Tutus bought a new sewing machine for $50,000 that will be depreciated over 5 years using double-declining-balance depreciation with a switch to straight-line. Required: a. Find the depreciation charge each year. b. If the sewing machine is sold after 4 years for $20,000, what will be the after-tax proceeds on the sale if the firm’s tax bracket is 35%?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 2P
Related questions
Question
Talia’s Tutus bought a new sewing machine for $50,000 that will be
Required:
a. Find the depreciation charge each year.
b. If the sewing machine is sold after 4 years for $20,000, what will be the after-tax proceeds on the sale if the firm’s tax bracket is 35%?
Expert Solution
Step 1Introduction
Cost of machine= $50000
Useful life = 5 Years
Rate of depreciation = 20%
Year | Adjusted Balance | Depreciation | Straight line depreciation | Declining balance with a switch to Straight line |
1 | 50000 | 20000 | 10000 | 20000 |
2 | 30000 | 12000 | 7500 | 12000 |
3 | 18000 | 7200 | 6000 | 7200 |
4 | 10800 | 4320 | 5400 | 5400 |
5 | 5400 | 5400 |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
Fundamentals Of Financial Management, Concise Edi…
Finance
ISBN:
9781337902571
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning