Dave's Demolitions Inc. is considering purchasing $697,400 of equipment for a four- year project. The equipment falls in the five-year MACRS class. At the end of the project the equipment can be sold for an estimated $135,000. If the tax rate is 23 percent, what is the amount of the after-tax salvage value of the equipment?
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- The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?Marshall-Miller & Company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 4 years and then to sell it for $15.500. If the marginal tax rate is 20%, what will the after-tax salvage value be when the machine is sold at the end of Year 4? Depreciation Rate 0.20 0.32 Year 1 2 3 4 56 0.19 0.12 0.11 0.00Marshall-Miller & Company is considering the purchase of a new machine for $60,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 5 years and then to sell it for $18,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 5? Complete the table -THIS QUESTION WILL BE ON THE FINAL EXCEPT WITH DIFFERENT NUMBERS. You will fill in the entire table. I am giving you a few numbers to help you check your work Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 MACRS % 20% 32% 19% 12% 11% 6% 7,200 Depreciation expense Book value 48,000 3,600 $0 If we sell at the end of year 5 for $18,500 then determine if we have a gain or a loss and the appropriate tax consequence Gain of 14,900 tax owed is $5,960
- McPherson Company must purchase a new milling machine. The purchase price is $50,000, including installation. The machine has a tax life of 5 years, and it can be depreciated according to the following rates. The firm expects to operate the machine for 4 years and then to sell it for $12,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4? Depreciation Rate Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 a. $10,900 b. $9,837 c. $8,878 d. $9,345 e. $10,335 0.20 0.32 0.19 0.12 0.11 0.06A company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 4 years and then to sell it for $5,000. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4? Year Depreciation Rate 1 0.20 2 0.32 3 0.19 4 0.12 5 0.11 6 0.06 Group of answer choices $6,464 $6,720 $7,232 $5,504 $6,400Moore & Moore (MM) is considering the purchase of a new machine for $50,000, installed. MM will use the MACRS accelerated method to depreciate the machine, which is classified as 5-year property (see the following MACRS table for depreciation rates). MM expects to sell the machine at the end of its 4-year operating life for $10,000. If MM's marginal tax rate is 40%, what will the after-tax cash flow be when it disposes of the machine at the end of Year 4? Annual depreciation rates for years 1 through 6 are respectively as follows: 20%, 32%, 19%, 12%, 11%, 6%. A. $7,656 B. $8,059 C. $8,484 D. $8,930 E. $9,400
- Billy Bob's Monster Trucks is considering the purchase of some new vehicles. The total cost for the vehicles is $202,400 and they are to be depreciated straight-line to zero over 10 years. The vehicles will be used for 5 years, after which they can be sold for $25,300. If the relevant tax rate is 30 percent, what is the after-tax cash flow from the sale of this asset? (Do not round your intermediate calculations.) NOTE: Taxes are affected when the asset is sold at either a gain or loss over book value. Multiple Choice O $45,666 $17,710 $48,070 $336,502 $50,474 ↓ABC, Inc. is considering the purchase of a $116,000 piece of equipment. The equipment is classified as 5-year MACRS property. The company expects to sell the equipment after two years at a price of $50,000. The tax rate is 35 percent. What is the expected after-tax cash flow from the anticipated sale?Acefacto Inc., has asked for you to calculate the after-tax salvage value of an asset it plans on using in a construction project. The project will be depreciated straight line to a value of$670,000at the end of the project's and assets ten year life. Ace's marginal tax rate is32%. The firm will have to pay$8,047,675to buy the asset. You have estimated that they could sell the asset for$787,309to a Brazilian firm at the end of the project. Answer in dollars and cents.
- Acefacto Inc., has asked for you to calculate the after-tax salvage value of an asset it plans on using in a construction project. The project will be depreciated straight line to a value of $670,000 at the end of the project's and assets ten year life. Ace's marginal tax rate is 31%. The firm will have to pay $8,802,175 to buy the asset. You have estimated that they could sell the asset for $595,641 to a Brazilian firm at the end of the project. Answer in dollars and cents.Pulaski Starlight Inc. is evaluating a project. The project is expected to generated new sales of $1,718,798 and incur costs of $606,990 annually. The project will be depreciated using the MACRS approach. The equipment needed for the project will cost $4,495,137 and is considered to be a five year MACRS class. The company's tax rate is 28%. Given this information, what would be the project's third year operating cash flow? Answer in dollars and cents.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?