A company is evaluating a new 4-year project. The equipment necessary for the project will cos $3,400,000 and can be sold for $705,000 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 21 percent. Wh is the aftertax salvage value of the equipment? Multiple Choice

A company is evaluating a new 4-year project. The equipment necessary for the project will cos $3,400,000 and can be sold for $705,000 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 21 percent. Wh is the aftertax salvage value of the equipment? Multiple Choice

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 17E: Postman Company is considering two independent projects. One project involves a new product line,...

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Postman Company is considering two independent projects. One project involves a new product line, and the other involves the acquisition of forklifts for the Materials Handling Department. The projected annual operating revenues and expenses are as follows: Required: Compute the after-tax cash flows of each project. The tax rate is 40 percent and includes federal and state assessments.
A company is evaluating a new 4-year project. The equipment necessary for the project will cost $3,850,000 and can be sold for $750,000 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 23 percent. What is the aftertax salvage value of the equipment?
Brummit Corporation, is evaluating a new 4 year project. The equipment necessary for the project will cost $2.250,000 and can be sold for $291,000 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 24 percent What is the aftertax salvage value of the equipment? Mutiple Choice O $221360 $291.000 $252.264 $314.472 $267,528
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.
A corporation expects to receive $32,000 each year for 15 years if a particular project is undertaken. There will be an initial investment of $150,000. The expenses associated with the project are expected to be $7500 per year. Assume straight-line depreciation, a 15-year useful life, and no salvage value. Use a combined state and federal 28% marginal tax rate, and determine the project’s after-tax rate of return.
A corporate expects to receive $37,399 each year for 15 years if a particular project is undertaken. There will be an initial investment of $105,308. The expenses associated with the project are expected to be $7,716 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. Enter your answer as follow: 123456.78
Brummitt Corp., is evaluating a new 4 - year project. The equipment necessary for the project will cost $2, 950, 000 and can be sold for $319,000 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 35 percent. What is the aftertax salvage value of the equipment?
A corporate expects to receive $35,900 each year for 15 years if a particular project is undertaken. There will be an initial investment of $121,595. The expenses associated with the project are expected to be $7,608 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.
XYZ Company plans to invest $1 million in a new plant which is expected to produce a uniform annual net benefit before tax of $300,000 in terms of the base-year dollars over the next 5 years. The plant has a salvage value of $100,000 at the end of 5 years and the depreciation allowance is based on the straight-line depreciation method. The corporate tax rate is 34%, and the after-tax MARR specified by the firm is 10%. determine whether the investment is worthwhile. Year (F/P, i, n) (P/F, i, n) (F/A, i, n) (A/F, i, n) (A/P, i, n) (P/A, i, n) 1. 1000 1. 2100 1. 3310 1. 4641 1. 6105 1. 7716 0. 9091 0. 8264 0. 7513 0. 6830 0. 6209 0. 5645 0. 5132 0. 4665 0. 4241 1. 0000 0. 4762 0. 3021 0. 2155 0. 1638 0. 1296 0. 1054 0. 0874 0. 0736 1. 0000 1. 1000 0. 5762 0. 4021 0. 3155 0. 2638 0. 2296 0. 2054 0. 1874 0. 1736 0. 9091 1. 7355 1 2 2. 1000 3 3. 3100 2. 4869 4 4. 6410 3. 1699 5 6. 1051 3. 7908 7.7156 9. 4872 11. 4359 4. 3553 7 1.9487 4. 8684 8 2. 1436 5. 3349 2. 3579 13. 5795 5. 7590
Precision Ltd is considering an equipment that costs $176,000, and is depreciated on a straight-line basis to zero over its 11-year useful life. The equipment is expected to be used in a 7- year project. Precision Ltd believe that at the end of the project (i.e. year 7), the company can sell the equipment for $22,000. If the tax rate is 30%, what is the net cash flow from the sale of this equipment in year 7?
A company plans to add an additional production line at an initial cost of $ 1,250,000 that will give gross savings of $ 1,000,000 per year for 6 years. The annual costs for operating this line would be $250,000 for the same period. For tax purposes the company uses sum-of-the-year-digits depreciation, a salvage value of $125,000 and a life of 6 years for evaluating the project... The debt ratio is 60% and the cost of debt is 12% and the debt obligation to be paid in 6 constant total yearly payment of interest and principal. The company’s tax rate is 40% and the minimum acceptable rate of return is 15% for total cash flows. On the basis of equity cash flows pls determine if the additional production line is viable? (Ignore investment tax credit and working capital)
Consider an asset that costs $665,000 and is depreciated straight-line to zero over its nine-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $137,000. If the relevant tax rate is 21 percent, what is the aftertax cash flow from the sale of this asset?