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 1152 percent, respectively. The company's tax rate is 24 percent What is the aftertax salvage value of the equipment? Mutiple Choice O $221360 $291000 $252.264 $314,472 $267528

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 1152 percent, respectively. The company's tax rate is 24 percent What is the aftertax salvage value of the equipment? Mutiple Choice O $221360 $291000 $252.264 $314,472 $267528

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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
Macrohard Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 35 %, 43%, 17%, and 5% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. Equipment cost (depreciable basis) P78,000 Sales revenues, each year 50,000 Operating costs (excl. depreciation) 25,000 Tax rate 25.0% The following are the questions/requirements for this data set. Fill-up the answers in the next 3 questions: (Round final answers to nearest peso) Year 1 Operating Cash Flow • Year 3 Operating Cash Flow Year 5 Operating Cash Flow
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.
Consider an asset that costs $369,600 and is depreciated straight-line to zero over its 7-year tax life. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for $46,200. If the relevant tax rate is 23 percent, what is the aftertax cash flow from the sale of this asset? Multiple Choice $72,006.00 $35,574.00 $311,862.00 $68,405.70 $75,606.30
Marston Manufacturing Company is considering a project that requires an investment in new equipment of $3,780,000. Under the new tax law, the equipment is eligible for 100% bonus depreciation at t = 0 so the equipment will be fully depreciated at the time of purchase. Marston estimates that its accounts receivable and inventories need to increase by $720,000 to support the new project, some of which is financed by a $288,000 increase in spontaneous liabilities (accounts payable and accruals). The company's tax rate is 25%. The after-tax cost of Marston’s new equipment is . Marston’s initial net investment outlay is . Suppose Marston’s new equipment is expected to sell for $600,000 at the end of its four-year useful life, and at the same time, the firm expects to recover all of its net operating working capital (NOWC) investment. Remember, that under the new tax law, this equipment was fully depreciated at t = 0. If the firm’s tax rate is 25%, what is the…
The lovely company has a new 4-year project that will have annual sales of 9,300 units. The price per unit it $20,80 and the variable cost per unit is $8.55. The project will require fixed assets of $103.000, which will be depreciated on a 3 year MACRS schedule. The annual depreciation percentages are 33.33 percent, 44.45 percent, 14.81 percent, 7.41 percent, respectively. Fixed costs are $43,000 per year and the tax rate is 34 percent. What is the operating cash flow for year 3?
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
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.
MotoSport is buying an asset that costs $730,000 and can be depreciated at 20 percent per year (Class 8) over its eight-year life. The asset is to be used in a three-year project at the end of the project, the asset can be sold for $740,200. The company faces a tax rate of 26% The sale of this asset will close the asset class. The from the sale of asset is Multiple Choice Capital gain; $10,200 Capital gain; $319,720 Terminal loss, $10,200 Terminal loss; $319,720 Capital gain: $11,583
A nine year project involves equipment costing $2,320,000 that will be depreciated using the five-year MACRS schedule. If the estimated pre-tax salvage value for the equipment at the end of the project's life is $417,600, what is the after-tax salvage value for the equipment? Assume a marginal tax rate of 21 percent. O $329,904 $399.184 $6,496 O $505.296
Daily Enterprises is purchasing a $10.41 million machine. It will cost $65,217.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.47 million per year along with incremental costs of $1.23 million per year. Daily's marginal tax rate is 35.00%. The cost of capital for the firm is 11.00%. (answer in dollars..so convert millions to dollars) The project will run for 5 years. What is the NPV of the project at the current cost of capital?
The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $277,000 and expenses by $184,000. The project will require $93,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project. The company has a marginal tax rate of 21 percent. What is the depreciation tax shield? Multiple Choice $19,530 $9,695 $12,245 $6,440 $3,255

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