7.3 q1- A 7-year project requires equipment costing $13,000. Tax law requires the use of straight-line depreciation on this type of equipment, and sets the maximum depreciation rate at 10% p.a. What is the book value of the equipment at the end of the project? a.
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7.3
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A 7-year project requires equipment costing $13,000. Tax law requires the use of straight-line
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- A 5-year project requires equipment costing $13,000. Tax law requires the use of straight-line depreciation on this type of equipment, and sets the maximum depreciation rate at 15% p.a. What is the book value of the equipment at the end of the project? Question 1Answer a. $3250 b. $2950 c. $3150 d. $0A mining project requires the purchase of new drilling equipment at a cost of $69750. A further $36000 will be spent on transport, installation and initial maintenance of the equipment, at the very beginning of the project. Of this amount, 35% constitutes maintenance costs and will be written off in Year 1, and the remainder will be capitalised. What is the value of the equipment for depreciation purposes? Question 4Answer a. $82350 b. $93150 c. $105750 d. $697506.1 A project requires the purchase of new equipment at a cost of $12,000, which will be depreciated over the life of the asset. A further $8000 spent on transport and installation will be added to the purchase price of the equipment for depreciation purposes, and $1000 will be spent on advertising and other operating expenditure to get the project up and running. Excluding depreciation, what is the amount that will be claimed as a tax deduction in Year 1? a. $21,000 b. $1,000 c. $20,000 d. $9,000
- Ch 6. Seeing Red has a new project that will require fixed assets of $935,000, which will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company has a tax rate of 28 percent. What is the depreciation tax shield for Year 3? Round to the nearest cent and format answer as "XX,XXX.XX"10. An asset which cost $10,000 when new is being depreciated under MACRS using a 5-year normal recovery period. What is the depreciation expense in year 3?A. $1,900B. $1,200C. $1,500D. $2,100Q1. Company Confidential purchases a laser cutting machine for Php 28,000,000.00. This does not include the delivery and installation cost of 15% of the item price. They plan to use it for 15, years, though it is also rated for 100,000 hours only. The salvage value for the machine is expected to be Php 25,000.00 at the end of life. Calculate and draw the depreciation table (year, depreciation, book value per year) for the following: Finally, graph all the depreciations as lines in a single graph, with proper labels and legends. a) Straight line depreciation b) Double declining balance c) Sinking fund method with 6% interest rate
- Given the following information and assuming straight-line depreciation to zero, what is the IRR of this project? Initial investment = $400,000; life = four years; cost savings = $125,000 per year; salvage value = $20,000 in year 5; tax rate = 34%; discount rate = 12%.Multiple Choice7.51%9.43%10.24%6.25%8.15%7. Problem 12.08 (New Project Analysis) A-Z dofice еВook You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $80,000, and it would cost another $12,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $28,000. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an $9,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $52,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 35%. a. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash flow? Enter your answer as a positive value. Round your answer to the nearest cent. 2$ b. What are the project's annual cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your…8. A project has an initial cost of $32,000 and a 3-year life. The projected net income from the project is $1,500, $2,100, and $1,700 a year for the next 3 years, respectively. The company uses straight-line depreciation to a book value of zero over the life of the project. What is the average accounting return? A. 8.72% В. 10.10% С. 11.04% D. 14.69%
- Equipment with a book value of $11,000 will be sold at the end of a project for a salvage value of $8,000. The tax rate is 30%. What is the tax effect resulting from the profit or loss from the sale of the equipment (where a negative number means tax is payable and a positive number means that there is a tax shield)? Question 2Answer a. $900 b. $-900 c. $3300 d. $-3300Q.2 A piece of construction equipment costs $325,000. It will be depreciated as Modified Accelerated Cost Recovery System (MACRS) 7-year property, and the firm's tax rate is 30%. The equipment generates $80,000 in net revenue per year. The after-tax cash flow in Year 3 will be $______.Fill in the missing numbers and then ation tax shield? 5. Calculating Depreciation A piece of newly purchased industrial equipment costs $745,000 and is classified as seven-year property under MACRS. Calculate the annual depreciation allowances and end-of-the-year book values for this equipment. LO 2 6. Calculating Salyage Value Consider an asset that costs $635,000 and is