Southern inc. purchases an asset for 98,000. Thus asset qualifies as a 3 year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1= 33.33% year 2: 44.45% year 3= 14.81% and year 4 = 7.41%. Southern has a tax date of 25%. If the asset is sold at the end of 2 years for 29,000 what is the cash flow disposal ? 17,404 11,129 13,923 21,755 27,194

Southern inc. purchases an asset for 98,000. Thus asset qualifies as a 3 year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1= 33.33% year 2: 44.45% year 3= 14.81% and year 4 = 7.41%. Southern has a tax date of 25%. If the asset is sold at the end of 2 years for 29,000 what is the cash flow disposal ? 17,404 11,129 13,923 21,755 27,194

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

See similar textbooks

Similar questions

Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?
Churchill Ltd. purchases an asset for $150,000. This asset qualifies as a five-year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1 = 20.00%; year 2 = 32.00%; year 3 = 19.20%; year 4 = 11.52%. Churchill has a tax rate of 30%. If the asset is sold at the end of four years for $40,000, what is the cash flow from disposal?
What is the expected after-tax cash flow from selling a piece of equipment if TwoPlus purchases the equipment today for $143,000.00, the tax rate is 23.00 percent, the equipment is sold in 2 years for $36,500.00, and MACRS depreciation is used where the depreciation rates in years 1, 2, 3, 4, and 5 are 20%, 32%, 19%, 12%, and 10%, respectively? O $17,102.80 (plus or minus $10) $37,643.10 (plus or minus $10) $50,470.20 (plus or minus $10) $43,892.20 (plus or minus $10) None of the above is within $10 of the correct answer
Northern Inc. purchases an asset for $150,000. This asset qualifies as a five−year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1 = 20.00%; year 2 = 32.00%; year 3 = 19.20%; year 4 = 11.52%. The firm has a tax rate of 20%. If the asset is sold at the end of four years for $40,000, what is the cash flow from disposal?
An asset purchased today at a cost of $50,000 is depreciated straight-line down to value 0 over a period of 5 years, for tax purposes. Suppose the asset is sold at a price of $30,000 at the end of 2 years. What is the after-tax cash inflow from salvage (selling the asset), assuming a tax rate of 40%? a) $30,000 b) $26,000 c) $38,000 d) $20,000 e) None of the above
Consider an asset that costs $1,075, 196 and is depreciated straight-line to zero over its 15-year tax life. The asset is to be used in a 5-year project; at the end of the project, the asset can be sold for $109, 800. If the relevant tax rate is 0.39, what is the aftertax cash flow from the sale of this asset (SVNOT)?
Consider an asset that costs $1,280,170 and is depreciated straight-line to 83,206 over its 14-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 $128,169. If the relevant tax rate is 0.21, what is the aftertax cash flow from the sale of this asset (SVNOT)?
You buy a property for $100,000 in year 0. The building is depreciated using straight-line depreciation over 27.5 year. The NOI is $5,000 in year 1 and grows at 2% thereafter. The building is sold at a the end of year 4 at a terminal cap rate of 6%. Assume an ordinary income tax rate of 35%, a capital gains tax rate of 20%, and a depreciation recapture tax rate of 25%. What is going to be the total tax bill on the sale? O 1,187 O 1,959 O 3,146 O 3,636
What is the expected after - tax cash flow from selling a piece of equipment if Probst purchases the equipment today for $548, 860.00, the tax rate is 39.9 percent, the equipment will be sold in 3 years for $98, 800.00, and the equipment will be depreciated to $72, 600.00 over 12 years using straight - line depreciation? $106, 885.74 (plus or minus $10) $262, 538.29 (plus or minus $10) - $72, 688.20 (plus or minus $10) $230,867.00 (plus or minus $10) None of the above is within $10 of the correct answer
An economic analysis is being performed in real (not actual) dollars. The company’s combined MARR is 10%, and the inflation rate is 4%. The asset has a first cost of $10,000. It will be depreciated as MACRS 3-year property using rates of 33.33%, 44.45%, 14.81%, and 7.41%. What depreciation amount will be shown in year 3 of the analysis?
An asset with a first cost of $7,000 is depreciated using the Modified Accelerated Cost recovery System (MACRS) over a 5-year period. The cash flow before taxes (CFBT) is estimated at $10,000 for the first 4 years and $5000 thereafter as long as the asset is retained. The effective tax rate is 40%, and the money is worth 8% per year. In present worth dollars, how much of the cash flow generated by the asset over its recovery period is lost to taxes?
Consider an asset that costs $422,400 and is depreciated straight-line to zero over its 8- year tax life. The asset is to be used in a 6-year project; at the end of the project, the asset can be sold for $52,800. If the relevant tax rate is 24 percent, what is the aftertax cash flow from the sale of this asset? Multiple Choice $268,236.00 $68,745.60 $62,198.40 $65,472.00 $40,128.00 Drou 10 Novt -