The Melbo Foundation is contemplating the purchase of new equipment, which may potentially increase revenues by 25%. Currently, sales are R850,000 per year and cost of sales are 55% of sales. The equipment is expected to last for 5 years with no residual value (tax allowance granted is at 20% per year). The capex/ cost of equipment R257 500. The corporate tax rate is 28%. Calculate the estimated annual tax payment increase/decrease? R2,065 decrease R12,355 increase R12,075 decrease R2,625 increase
The Melbo Foundation is contemplating the purchase of new equipment, which may potentially increase revenues by 25%. Currently, sales are R850,000 per year and cost of sales are 55% of sales. The equipment is expected to last for 5 years with no residual value (tax allowance granted is at 20% per year). The capex/ cost of equipment R257 500. The corporate tax rate is 28%. Calculate the estimated annual tax payment increase/decrease? R2,065 decrease R12,355 increase R12,075 decrease R2,625 increase
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 10P: The D.J. Masson Corporation needs to raise $500,000 for 1 year to supply working capital to a new...
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