The associated estimates are summarized below: $75,000 nnual receipts nnual expenses $45,000 seful life alvage value 8 years $20,000 preciation will be used, and the effective income tax rate is per year. Determine whether this investment is an attracti RSIT
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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?Refer to the chapter opener and Example 7-14. As an alternative to the coal-fired plant, PennCo could construct an 800 MW natural gas–fired plant. This plant would require the same initial investment of $1.12 billion dollars to be depreciated over its 30-year life using the SL method with SV30=0SV30=0. The capacity factor estimate of the plant would still be 80%, but the efficiency of the natural gas–fired plant would be 40%. The annual operating and maintenance expense is expected to be $0.01 per kWh. The cost of natural gas is $8.00 per million Btu and the carbon dioxide tax is $15 per metric ton. Natural gas emits 55 metric tons of carbon dioxide per billion Btu produced. The effective income tax rate is 25%, and the after-tax MARR is 10% per year. Based on the after-tax cost of electricity, create a spreadsheet to determine whether PennCo should construct a natural gas–fired or coal-fired plant. Note: 1kWh=3,413 Btu. Chapter Opener - (1st image), Example - (2nd image) For the…Need answers,ASAP 4. a sediment control project in nueva vizcaya requires an initial investment of 145,000, has a salvage value of 22,000 after six years, incurs annual expenses of 10,000, and provides annual revenue of 18,000. using a marr of 10%, determine the aw of this project.
- Saline Company is considering investing in a new project. The project will need an initial investment of $1,200,000 and will generate $600,000 (after-tax) cash flows for three years. Calculate the IRR for the project. Select one: a. 23.4% b. 14.5% c. 20.2% d. 16.25% e. 18.6%A corporate jet costs $1,350,000 and will incur $200,000 per year in maintenance costs. The jet can be sold for $650,000 after 5 years. What is the capital recovery? MARR = 15% a. $506,310 b. $306,310 c. $270,000 d. $650,000 Your company just purchased a bar-code system for $70,000. It has a five-year MACRS class life. The expected market value of the bar-code system in 3 years is $32,000. What is the gain (or loss) when this asset is sold at end year 3? a. $11,120 b. $11,840 c. $5,120 d. -$1,600Given: 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%
- The effective combined tax rate in a firm is 28%. An outlay of $2 million for certain new assets is under consideration. Over the next 9 years, these assets will be responsible for annual receipts of $650,000 and annual disbursements (other than for income taxes) of $225,000. After this time, they will be used only for stand-by purposes with no future excess of receipts over disbursements.(a) What is the prospective rate of return before income taxes?(b) What is the prospective rate of return after taxes if straight-line depreciation can be used to write off these assets for tax purposes in 9 years?(c) What is the prospective rate of return after taxes if it is assumed that these assets must be written off for tax purposes over the next 20 years, using straight-line depreciation?The effective combined tax rate in a firm is 28%. An outlay of $2 million for certain new assets is under consideration. Over the next 9 years, these assets will be responsible for annual receipts of $650,000 and annual disbursements (other than for income taxes) of $225,000. After this time, they will be used only for stand-by purposes with no future excess of receipts over disbursements. (a) What is the prospective rate of return before income taxes? (b) What is the prospective rate of return after taxes if straight-line depreciation can be used to write off these assets for tax purposes in 9 years? (c) What is the prospective rate of return after taxes if it is assumed that these assets must be written off for tax purposes over the next 20 years, using straight-line depreciation? please solve it step by stepDetermine whether the following contract described below is worthwhile ofundertaking after taxes if at the end of the 3-year of ownership the contract, you expect to sellboth depreciable equipment and land. Use present worth analysis under MARR = 8% andeffective tax rate.
- A car industry invested $20,000 in cars with a 3-year useful life. The cars will have no salvage value, as the cost to remove it will equal its scrap value. The uniform annual benefits from the cars are $12,000. For a combined 25% income tax rate, and 100% bonus depreciation, compute the after-tax net present worth (NPW) using MARR if 10%.Acme Manufacturing makes their preliminary economic studies using a before-tax MARR of22%. More detailed studies are performed on an after-tax basis. If their effective tax rate is23%, what is the after-tax MARR? Choose the correct answer below. A. The after-tax MARR is16.94%. B. The after-tax MARR is4.04%. C. The after-tax MARR is5.06%. D. The after-tax MARR is19.29%.A building has a salvage value of P1 M after 50 years. Annual depreciation is P2 M. Using straight line method of depreciation, how much could you afford to sell the building after 30 years? Select one: a. P 42M b. P 41M c. P 40 M d. P 45M