Construction Management
5th Edition
ISBN: 9781119256809
Author: Daniel W. Halpin, Bolivar A. Senior, Gunnar Lucko
Publisher: WILEY
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Question
Chapter 6, Problem 5RQE
To determine
Find the name of the amount of money that can be deducted directly from the computed tax, instead of from the adjusted gross income.
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Students have asked these similar questions
You pay $18,000 for new equipment plus you pay $2,000 to install it, which is added to the cost
basis. Each year for five years, you earned $5,000 from the use of this equipment from which you
then
needed to subtract $1,000 in expenses.
(a) Using straight-line depreciation over a 5-year lifetime (with a half-year adjustment in years 1 and
6)
and a tax rate of 28%, what was your after-tax cash flow (ATCF) from this investment in year 3?
(b) Using the GDS depreciation schedule for a 5-year recovery period, what was your ATCF in year 3?
GDS depreciation schedule for a 5-year recovery period
year = 123 4 5 6
factor = 0.20 0.32 0.192 0.1152 0.1152 0.0576
(c) What is the present worth at time 0 of this investment using a MARR of 8%?
As we mentioned in this chapter, assets such as machines, cars, and computers lose their value over a period of time. Companies use this reduction in value of an asset against their before-tax income. An example of a depreciation method is called the straight line. Investigate what is meant by straight line depreciation. Write a brief report explaining your findings and giving examples.
3. On January 1 of 2017, your company purchased the following equipment. How much
will you depreciate for the fiscal year ending in 2020 when you have your CPA (certified
public accountant) file your tax return on April 15, 2021 assuming a straight-line
depreciation method? How much will you have depreciated total as of this point in time?
What are the remaining book values for each piece of equipment?
1. Dump truck, 1,000,000 birr expected resale value of 200,000 birr
2. Backhoe, 2,800,000 birr, resale 400,000 birr
3. Five computers, 10,000 birr each, no resale value
4. Flatbed trailer, 750,000 birr, resale $100,000 birr
5. Five pickup trucks, 300,000 birr each, 20,500 birr resale value each
6. Two construction jobsite trailers, 200,000 birr each, 50,000 birr resale value each
Chapter 6 Solutions
Construction Management
Knowledge Booster
Similar questions
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- How much is the interest and the accumulated amount that will be paid on a P 35,750 loan that was made on May 1, 2002 and repaid on August 1, 2005 with exact simple interest at 6.34% per year.arrow_forwardEx: H.W. Assets costing $ 24,000 are expected to be used for 10 years and have a salvage value of $ 4,000 at the end of its useful life. Find the payments for depreciation for the third year and the book value at the end of the third year using previous depreciation methods. اصول كلفها 24000$ يتوقع أن تستعمل لمدة 10 سنوات ولها قیمة انقاض 4000$ في نهاية الفترة. أوجد المدفوعات الخاصة بالاندثار ل لسنة الثالثة والقيمة الدفترية في نهاية السنة الثالثة مستعملا طرق الاندثار السابقة.arrow_forwardCompute the future value of a $3500 deposit, after eight years, in an account that pays a simple interest rate of 5%. How much interest will be paid to this account?arrow_forward
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