A corporation acquires specialized machinery for $200,000 with a useful life of 9 years. The machinery has an annual benefit of $40,000 and a salvage value of $20,000. Calculate the before-tax cash flow, annual depreciation expense, taxable income, yearly taxes, and after-tax cash flow, considering a 30% bonus depreciation for the first year and straight-line after that and a state income tax rate of 9%. 5. A corporation acquires specialized machinery for $200,000 with a useful life of 9 years. The machinery has an annual benefit of $40,000 and a salvage value of $20,000. Calculate the before-tax cash flow, annual depreciation expense, taxable income, yearly taxes, and after-tax cash flow, considering a 30% bonus depreciation for the first year and straight-line after that and a state income tax rate of 9%.

A corporation acquires specialized machinery for $200,000 with a useful life of 9 years. The machinery has an annual benefit of $40,000 and a salvage value of $20,000. Calculate the before-tax cash flow, annual depreciation expense, taxable income, yearly taxes, and after-tax cash flow, considering a 30% bonus depreciation for the first year and straight-line after that and a state income tax rate of 9%. 5. A corporation acquires specialized machinery for $200,000 with a useful life of 9 years. The machinery has an annual benefit of $40,000 and a salvage value of $20,000. Calculate the before-tax cash flow, annual depreciation expense, taxable income, yearly taxes, and after-tax cash flow, considering a 30% bonus depreciation for the first year and straight-line after that and a state income tax rate of 9%.

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 18E

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A new piece of equipment costs $500,000, and depreciated according to the 5 year MACRS schedule. Assume the equipment makes you earn 350,000 a year more, and increases the operating expenses by $100,000 annually. Assume a federal applicable tax rate of 32%. For year 2, calculate: (a) before tax cash flow (BTCF) (b) taxable income (c) taxes due (d) after tax cash flow (ATCF)
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