You plan on buying a bottling machine for $2 llion, which can be salvaged for $400,000 in 8 ars. Your tax rate is 43% and the CCA rate is %. Your cost of capital is 13%. What is esent value of the CCA tax sheild? (Answer: E) $338,447 b. $378,521 c. $422,781 d. $458, 402
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- An investor owns a property that produces an NOI of $110,000 and has an annual debt service of $70,000 and the forecast of cost recovery and interest deductions are $38,427 and $58,593 respectively. The investor’s marginal tax rate is 35 percent. The investor’s projected cash flow after taxes is: A. $30,000 B. $35,457 C. $43,256 D. $25,821QUESTION 1 A new machine is to be purchased for $200,000. The company believes it will generate $75,000 annually in revenue due to the purchase of this machine. The company will have to train an operator to run this machine and this will result in additional labor expenses of $25,000 annually. The new machine will be depreciated using 5 years MACRS, even though the life of the project is 7 years, and the salvage value is estimated to be $0 at the end of year 7. The tax rate is 40% and the company's MARR is 15%.A firm buys a piece of equipment for $115,866.00 and will straight-line depreciate it to zero over five years. If the tax rate is 39.00%, what is the present value of the depreciation tax shield if the cost of capital is 10.00%? Submit Answer format: Currency: Round to: 2 decimal places. Show Hint
- Suppose you sell a fixed asset for $125,000 when its book value is $139,000. If your company's marginal tax rate is 30%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)? Group of answer choices a. $120,080 b. $129,200 c. $9,800 d. $14,000Equipment with a book value of $11,000 will be sold at the end of a project for a salvage value of $8,000. The tax rate is 30%. What is the tax effect resulting from the profit or loss from the sale of the equipment (where a negative number means tax is payable and a positive number means that there is a tax shield)? Question 2Answer a. $900 b. $-900 c. $3300 d. $-3300Assume that you calculated the ATER after year 3 as $275,000, the after-tax cash flow in year 4 was $6,800 and grew by 3% until year 8, and the ATER in year 8 was $300,000. Use this information to calculate the incremental IRR for not selling the property and collecting rents for years 4-8. What is the incremental IRR for not selling the property? A. 2.88% B. 4.29% C.-41.90% D. 6.40%
- Suppose you sell a fixed asset for $10,000 when its book value is $2,000. If your company's marginal tax rate is 21 percent, what will be the effect on cash flows of this sale (i.e., what will be the after - tax cash flow of this sale )? Multiple Choice $3, 680 $8, 320 $420 $6,500What will be the annual cash outflows for Mimi Inc. if it leased a milling machine for $8,200 per year for 5 years. Assume that the new machine cost $42,000 and will depreciate on a straight line basis over the 5 years and that Mimi has a tax rate of 32 percent. Select one: O a. $42,000 O b. -$8,264 O . - $2,688 O d. - $5,576 O e. $33,800Suppose you sell a fixed asset for $110,000 when its book value is $130,000. If your company's marginal tax rate is 21 percent, what will be the effect on cash flows of this sale (i.e., what wilIl be the after-tax cash flow of this sale)? (Enter your answer as a whole number.)
- 57. An asset was purchased for P66,000. The asset is expected to last for 6 years and will have a salvage value of P16,000. The company expects the income before tax to be P7,200 and the tax rate of the company is 30%. What is the average return on investment (accounting rate of return)? Group of answer choices 17.6% 10.9% 12.3% 7.6%Suppose you sell a fixed asset for $109,000 when its book value is $129,000. If your company’s marginal tax rate is 39 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)? (Enter your answer as a whole number.)Karen Corp has an asset they would like to sell. The asset has an original cost of $170,000 and accumulated depreciation of $109,000. The asset would be sold for $50,000 cash. Karen's tax rate is 40%. Calculate the after-tax cash inflow from the sale of this asset. a. $45,600 b. $54,400 c. $39,000 d. $43,400 e. $50,000 f. $30,000 g. $65,400 h. None of the above
