Troy Industries purchased a new machine 3 year(s) ago for $80,000. It is being depreciated under MACRS with a5-year recovery period using the schedule.. Assume 21% ordinary and capital gains tax rates. What is the bookvalue of the machine? b. Calculate the firm's tax liability for each case if it sold the machine for each of thefollowing amounts: $ 100,000, 56,000, 23,200 and $ 15,000

MACRS depreciation schedule specifies the specific depreciation rates. This accumulated depreciation…

Answered: Troy Industries purchased a new machine…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section2.A: Taxes

Problem 7P

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Troy Industries purchased a new machine 3 year(s) ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the schedule.. Assume 21% ordinary and capital gains tax rates. What is the book value of the machine? b. Calculate the firm's tax liability for each case if it sold the machine for each of the following amounts: $ 100,000, 56,000 , 23,200 and $ 15,000
Troy Industries purchased a new machine 4 year(s) ago for $80,000.It is being depreciated under MACRS with a 5-year recovery period using the schedule attached.Assume 21% ordinary and capital gains tax rates. a. What is the book value of the machine? b. Calculate the firm's tax liability if it sold the machine for each of the following amounts: $96,000; $56,000; $13,600; and $9,500.
The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $303,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $185,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. a. What is the book value of the equipment? The book value of the equipment after the third year is $ (Round to the nearest dollar.) b. If Jones sells the equipment today for $185,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? The total after-tax proceeds from the sale will be $ (Round to the nearest dollar.)
The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $299,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $181,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. a. What is the book value of the equipment? The book value of the equipment after the third year is $ (Round to the nearest dollar.)
2. The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $302,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $184,000and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. a. What is the book value of the equipment? The book value of the equipment after the third year is $____ (Round to the nearest dollar.) b. If Jones sells the equipment today for $184,000 and its tax rate is 21%, What is the after-tax cash flow from selling it? The total after-tax proceeds from the sale will be $____ (Round to the nearest dollar.)
A machine is purchased for $500,000 and is used through the end of Year 2. The machine falls under asset class 43 with a capital cost allowance (CCA) rate of 30%. At the end of Year 2, the machine is sold for $75,000. What is the present value of the lost CCA tax shields if the firm's marginal tax rate is 40% and its cost of capital is 5%? OA. $37,050 OB. $25,714 C. $15,180 D. $23,324 OE. $37,950
Easter Corporation will replace one of its assets with an updated model. The current asset was purchased two years ago at a cost of $70,000. It has been depreciated under MACRS using a five-year recovery period. The company can sell this existing asset for $30,000. The new asset is going to cost $80,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on both ordinary income and capital gains, the initial investment will be equal to what amount after adjusting for taxes?
Sandhill Corporation just purchased computing equipment for $22,000. The equipment will be depreciated using a five-year MACRS depreciation schedule. If the equipment is sold at the end of its fourth year for $14,000, what are the after-tax proceeds from the sale, assuming the marginal tax rate is 35 percent? (Round answer to 2 decimal places, e.g. 15.25.)
Watanabe Corporation is selling one of its assets for $1,700. The asset originally cost $10,000. It has been depreciated under MACRS using a five-year recovery period, and it has been depreciated for four full years. Assume that the tax rate is 40 percent on both ordinary income and capital gains. What are the tax effects of this transaction? Jellibean Corporation will replace one of its existing assets with a newer type. The existing asset was purchased two years ago at a cost of $30,000 and was being depreciated under MACRS using a five-year recovery period. This existing asset can be sold for $25,000. The new asset that they plan to buy will cost $75,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on both ordinary income and capital gains, the initial investment will be equal to what amount after adjusting for taxes? Calculate the initial purchase price for an asset that has a book value of $34,800 and has…
Grove Media plans to acquire production equipment for $845,000 that will be depreciated for tax purposes as follows: year 1, $329,000; year 2, $189,000; and in each of years 3 through 5, $109,000 per year. A 10 percent discount rate is appropriate for this asset, and the company’s tax rate is 20 percent. Required: Compute the present value of the tax shield resulting from depreciation. 2. Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($169,000 per year).
A mixer was purchased two years ago for $63346 and can be sold for $171667 today. The mixer has been depreciated using the MACRS 5-year recovery period and the firm pays 40 percent taxes on both ordinary income and capital gain. Find the after tax proceeds.
A company has purchased a machine (CCA rate 24%) at $221,000 and has a tax rate of 38.00%. By how much will the NPV change if the company is able to obtain a $15,000 salvage value for its machine at the end of the project's life in Year 10? Assume a discount rate of 8.80% and that all else remains the same.

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