ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 47P
To determine
To calculate: The annual cash benefit before tax.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
For its fabricated metal products, the Able Corp is paying $10,000 for special tools that have a 4-year useful life and no salvage value. Compute the depreciation for the SECOND year by each of the following methids:
a. DDB
b. Sum of Year's Digits
c. MACRS
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 company bought a new machine fot $300,000. The new machine generated revenue for $90,000 per year. Operating cost of that machine is $10,000 per year. The machine is depreciated according to 7-years MACRS method. The machine is sold for $80,000 in the middle of 6th year of service. Determine the after tax net present worth. Assume, the after-tax MARR is 10% and income tax rate is 25% (federal and state combined).
dont use excel
Chapter 12 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 12 - Prob. 1QTCCh. 12 - Prob. 2QTCCh. 12 - Prob. 3QTCCh. 12 - Prob. 1PCh. 12 - Prob. 2PCh. 12 - Prob. 3PCh. 12 - Prob. 4PCh. 12 - Prob. 5PCh. 12 - Prob. 6PCh. 12 - Prob. 7P
Ch. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 12 - Prob. 10PCh. 12 - Prob. 11PCh. 12 - Prob. 12PCh. 12 - Prob. 13PCh. 12 - Prob. 14PCh. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Prob. 21PCh. 12 - Prob. 22PCh. 12 - Prob. 23PCh. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Prob. 26PCh. 12 - Prob. 27PCh. 12 - Prob. 28PCh. 12 - Prob. 29PCh. 12 - Prob. 30PCh. 12 - Prob. 31PCh. 12 - Prob. 32PCh. 12 - Prob. 33PCh. 12 - Prob. 34PCh. 12 - Prob. 35PCh. 12 - Prob. 36PCh. 12 - Prob. 37PCh. 12 - Prob. 38PCh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 12 - Prob. 41PCh. 12 - Prob. 42PCh. 12 - Prob. 43PCh. 12 - Prob. 44PCh. 12 - Prob. 45PCh. 12 - Prob. 46PCh. 12 - Prob. 47PCh. 12 - Prob. 48PCh. 12 - Prob. 49PCh. 12 - Prob. 50PCh. 12 - Prob. 51PCh. 12 - Prob. 52PCh. 12 - Prob. 53PCh. 12 - Prob. 54PCh. 12 - Prob. 55PCh. 12 - Prob. 56PCh. 12 - Prob. 57PCh. 12 - Prob. 58PCh. 12 - Prob. 59PCh. 12 - Prob. 60PCh. 12 - Prob. 61PCh. 12 - Prob. 62PCh. 12 - Prob. 63PCh. 12 - Prob. 64PCh. 12 - Prob. 65P
Knowledge Booster
Similar questions
- 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.arrow_forwardAn automaker is buying some special tools for $100,000. The tools are being depreciated by double declining balance depreciation using a 4-year depreciable life and a $6250 salvage value. It is expected the tools will actually be kept in service for 6 years and then sold for $6250. The before-tax benefit of owning the tools is as follows: Year Before-Tax Cash Flow 1 $30,000 2 $30,000 3 $35,000 4 $40,000 5 $10,000 6 $10,000 6,250 Selling price Compute the after-tax rate of return for this investment situation, assuming a 30% incremental tax rate.arrow_forwardA piece of equipment bought for $50,000 at MKBK Systems is being depreciated using the Straight-Line method, a life of 5 years, and a salvage value of $5,000. At the end of four years, the management decided to sell the equipment for a modest price of $20,000. The company is in the 34% tax bracket. Compute the income tax that MKBK will owe on the sale of this equipment. Group of answer choices $6800 $3060 $2040 $5780arrow_forward
- A digitally controlled plane for manufacturing furniture is purchased on April 1 by a calandar -year taxpayer for 66,000. It is expected to last 12 years and have a salvage value of 5,000. Calculate the deprexiation deduction during years 1,4 and 8. A) Use straight line depreciation B) Use declining balance depreciation, with a rate that encures the book value equals the salvage title c) Use double declining balance depreciatin D) Use declining balance depreciation, switching to straight line depreciation. please show all steps and use an excell sheet..arrow_forwardThe Harris Foundry Company purchased newcasting equipment in 2010 at a cost of $190,000. Harris also paid $25,000 to have the equipment deliveredand installed. The casting machine has an estimateduseful life of 10 years, but it will be depreciated withMACRS over its seven-year class life.(a) What is the cost basis of the casting equipment?(b) What will be the depreciation allowance in eachyear of the seven-year class life of the castingequipment?arrow_forwardAn 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 4,784arrow_forward
- 3. An asset that is book-depreciated over a 5-year period by the straight line method has BV3 = $62,000 with a depreciation charge of $26,000 per year. Determine (a) the first cost of the asset and (b) the assumed salvage value. Answer: B = $140,000 and S = $10,000 Subject: ENGINEERING ECONOMICS Lesson: Decisions Under Certaintyarrow_forwardMommy Biscuit Inc. is considering the purchase of a new cookie oven. Theoriginal cost of the old oven was $30,000; it is now 5 years old, and it has acurrent market value of $13,333.33. The old oven is being depreciated over a 10-year life toward a zero estimated salvage value on a straight-line basis, resulting in a current book value of $15,000 and an annual depreciation expense of $3,000. The old oven can be used for 6 more years but has no market value after its depreciable life is over. Management is contemplating the purchase of a new oven whose cost is $25,000 and whose estimated salvage value is zero.Expected before-tax cash savings from the new oven are $4,000 a year over its full MACRS depreciable life. Depreciation is computed using MACRS over a 5-year life, and the cost of capital is 10 percent. The applicable depreciation rates are 0.20, 0.32, 0.19, 0.12, 0.11, and 0.06. Assume a 40 percent tax rate. What is the net present value of the new oven?arrow_forwardA 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?arrow_forward
- A linking machine is purchased for ₱20,000. It is estimated to have a useful life of 10 years and a salvage value of ₱10,000. Find the depreciation for the 1st year using SOYD Method. Dm=₱1,818.18arrow_forwardPerform 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?arrow_forwardCompute the declining-balance depreciation schedule for an asset with thefollowing data:Cost of the asset. I $90.000Useful life. N 7 yearsSalvage value, S $ 10,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education