A firm is planning to purchase a new machine costing ₱2,600,000 with freight and installation costs amounting to 125,000. The old unit to be traded-in will be given a trade-in allowance of ₱240,000. Other assets that are to be retired as a result of the acquisition of the new machine can be salvaged and sold for ₱52,000. The loss on the retirement of these assets is ₱50,000 will reduce taxes by ₱20,000 which is based on a tax rate of 40%. If the new machine is not purchased, extensive repairs on the old machine will have to be made at an estimated cost of ₱350,000. This cost can be avoided by purchasing the new machine. Additional gross working capital of ₱250,000 will be needed to support operations planned with the new machine. The net cost of investment would be?

Consider an asset that costs $528,000 and is depreciated straight-line to zero over its 6-year tax life. The asset is to be used in a 3-year project; at the end of the project, the asset can be sold for $66,000. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset? $115,038.00 $104,082.00 $109,560.00 $51,480.00 $429,012.00

A two-year project has sales of $582,960, cash costs of $411,015, and depreciation expense of $68,109. The tax rate is 24 percent and the discount rate is 12 percent. What is the amount of the annual depreciation tax shield? O $23,606.67 O $16,346.16 O $47,213.34 O $26,210.01 A Moving to another question will save this response. Question 12 of 30

6) A company is considering purchasing a new automated machine that is expected to generate an additional income of $125,000 annually. The equipment will have an initial cost of $187,500 and estimated annual operating and maintenance costs of $50,000. Its estimated salvage value at the end of its useful life of 4 years will be $37,500. The equipment is a MACRS-GDS 3-year property for calculating depreciation deductions. The effective tax rate is 35%. For this new machine, determine the after-tax cash flow for each year of operation. (Round off values to the nearest dollar) ΕΟΥ BTCF a) 0 1 2 3 4 MACRS-GDS Deduction Taxable Income Tax ATCF b) (8 points) If the after-tax MARR is 10% per year compounded annually, compute the PW of the after-tax cash flows. Based on this PW, would you recommend the purchase of this new equipment?