Brummitt Corporation, is evaluating a new 4-year project. The equipment necessary for the project will cost $3,000,000 and can be sold for $321,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's tax rate is 40 percent. What is the aftertax salvage value of the equipment? Multiple Choice $261,720 $321,000 $399,960 ○ $192,600 $242,040

A company is considering a new 6-year project that will have annual sales of $237,000 and costs of $148,000. The project will require fixed assets of $267,000, 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, 11.52 percent, and 5.76 percent, respectively. The company has a tax rate of 22 percent. What is the operating cash flow for Year 2?   Multiple Choice   $79,210   $88,217   $76,187   $38,377   $80,698

Tucker Enterprise Inc. is considering a project that requires a numerically controlled (NC) machine for $28,000 (year 0) and plans to use it for five years, after which time it will be scrapped. The allowed depreciation deduction during the first year is $4,000 because the equipment falls into the seven-year MACRS property category. (The first-year depreciation rate is 14.29%.) The cost of the goods produced by this NC machine should include a charge for the depreciation of the machine. Suppose the company estimates the following revenues and expenses, including the depreciation for the first operating year:• Gross income = $50,000• Cost of goods sold = $20,000• Depreciation on the NC machine= $4,000• Operating expenses = $6,000Without the project, the company's taxable income from regular business operations amounts to $20 million, which places the company in the highest tax bracket of 35%. Compute the net income from the project during the first year.

A company is considering a new 6-year project that will have annual sales of $234,000 and costs of $146,000. The project will require fixed assets of $265,000, 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, 11.52 percent, and 5.76 percent, respectively. The company has a tax rate of 34 percent. What is the operating cash flow for Year 2? a. 68460 b. 86912 c. 58752 d. 73097 e. 75379

King Nothing is evaluating a new 6-year project that will have annual sales of $425,000 and costs of $293,000. The project will require fixed assets of $525,000, 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, 11.52 percent, and 5.76 percent, respectively. The company has a tax rate of 35 percent. What is the operating cash flow for Year 3?   Multiple Choice   $81,480   $106,968   $116,425   $121,080   $151,320

Company Q is considering a project which needs an equipment. The cost of the equipment is $350,000. This equipment will be depreciated for five years on a straight-line basis to zero-salvage value. The market value of the equipment at the end of the fifth year is $25,000. Initial investment in working capital is $22,000. Annual sales and operating costs (excluding depreciation) from this project are $175,000 and 93,000 respectively. Company pays tax at 40%. The annual operating cash flow from this project is: a. $75,200 b. $64,000 c. $62,000 d. $77,200

Company Q is considering a project which needs an equipment. The cost of the equipment is $350,000. This equipment will be depreciated for five years on a straight-line basis to zero-salvage value. The market value of the equipment at the end of the fifth year is $25,000. Initial investment in working capital is $22,000. Annual sales and operating costs (excluding depreciation) from this project are $175,000 and 93,000 respectively. Company pays tax at 40%.  The annual operating cashflow from the project is         A. $75200                                                        B. $64000                                                        C. $62000                                                        D. $77200

A local delivery company has purchased adelivery truck for $15,000. The truck will be depreciated under MACRS as five-year property. Thetruck’s market value (salvage value) is expectedto decrease by $2,500 per year. It is expected thatthe purchase of the truck will increase its revenueby $10,000 annually. The O&M costs are expectedto be $3,000 per year. The firm is in the 40% taxbracket, and its MARR is 15%. If the company plansto keep the truck for only two years, what would bethe equivalent present worth?

A company is planning to augment its production capacity through equipment additions that will cost $350,000. This augmentation of capacity will result in increase of costs by $150000 per year for 5 years and also increases the gross income by $250,000 per year for the same period. For evaluating the project, the company uses Straight line depreciation model for taxation purpose, salvage value of $75,000 and a life of 5 years. If the MARR is 30% and company's tax rate is 35%, basis total cash flows is the capacity augmentation justified (Investment tax credit and working capital to be neglected)

The Campbell Company is evaluating the proposed acquisition of a new milling machine. The machine’s base price is $108,000, and it would cost another $12, 500 to modify it for special use by your firm. The machine will be sold after three years for $65,000. The applicable depreciation rates are 33 percent, 45 percent, 15 percent, and 7 percent. The machine would require an increase in net operating working capital (inventory) of $5,500. The machine would have no effect on revenues, but is expected to save the firm $44,000 per year in before tax operating costs, mainly labor. Campbell’s marginal tax rate is 35 percent. What is the Net Investment (NINV)