Estimate the after-tax ROR for a project that has a before-tax ROR of 24%. Assume the company is in the 35% tax bracket and it used MACRS depreciation for an asset that has a $27,000 salvage value.
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Estimate the after-tax ROR for a project that has a
before-tax ROR of 24%. Assume the company is in
the 35% tax bracket and it used MACRS
for an asset that has a $27,000 salvage value.
The rate of return after tax (RORAT) can be calculated by using the formula given below:
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- Small railcar manufacturing machinery had an $180,000 initial cost and a $30,000 projected salvage value after five years of use. In year 2, the revenue was $620,000, and the operating costs were $98,000. What would the difference in taxes paid in year 2 be if the depreciation method was straight line rather than MACRS if the company's effective tax rate was 36%? Year 2's MACRS depreciation rate is 32%.Estimate the approximate after-tax rate of return for a project that has a before-tax ROR of 18.6%. Assume the company's effective tax rate is 26% and it uses MACRS depreciation for an asset that has a $40,000 salvage value. The approximate after-tax rate of return is %.Paragon Properties built a shopping center at a cost of $50M in year 2010. The company started leasing space in July of 2014. The land was purchased for $5M. Determine the depreciation charges through 2017 if the property was sold in November 2017. $4,615,200 $5,002,200 $3,563,100 $3,991,050
- Estimate the CFAT for a company that has taxable income of $120,000, depreciation of $133,350, and an effective tax rate of 35%.What is the expected after-tax cash flow from selling a piece of equipment if TwoPlus purchases the equipment today for $162,000.00, the tax rate is 20.10 percent, the equipment is sold in 4 years for $36,600.00, 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? ос $27,026.46 (plus or minus $10) $34,778.94 (plus or minus $10) $57,897.96 (plus or minus $10) $31,522.74 (plus or minus $10) None of the above is within $10 of the correct answerSolve correctly in excel Six years ago, a company purchased $30,000 of equipment. The equipment has just been sold for $5000. The equipment was depreciated using 50% bonus depreciation / 50% MACRS (using a 5-year recovery period). The actual savings due to the purchase of the equipment is shown below. The firm's MARR is 12% and it's tax rate is 25%. What is the after-tax present worth of the investment? Year 1 2 3 4 5 6 Savings 5000 6000 7000 7000 4000 3000
- A piece of equipment will be DDB depreciated over an expected life of 12 years. There is a first cost of $25,000 and an estimated salvage of $2500. The depreciation charge for year 1 is: Less than $4000 O Between $4000-$4200 Between $4200-$4400 O Higher than $4400The Shell Corp. owns a piece of petroleum drilling equipment that costs $200,000 and will be depreciated by DDB depreciation with B=$200,000, N=10 years, S=$0. There is a combined 50% tax rate. Shell will lease the equipment to others each year and receive $80,000 per year. At the end of 3years, the firm will sell the equipment for $100,000. If the firm requires a 10% after-tax rate of return, what is the PW of the investment?A miniature building company named Tiny Touches purchased a 3D printer which costs $250,000. It is expected to last for 15 years and at the end of its useful life, it will cost $25,005 Find the annual depreciation if it’s depreciation using sinking fund method at 7%
- A piece of equipment having a negligible salvage and scrap value is estimated to have a MACRS and straight line recovery period of 5 years. The original cost of the equipment was $50,000. Determine (1) the depreciation charge for the second year if straight-line deprecia- tion is used and the percent of the original investment paid off in the first 2 years, and (2) the depreciation charge for the fifth year if the modified acceleration cost recovery system (MACRS) is used, and the percent of the original investment paid off in the first 2 years.A machine that had a first cost of $120,000 was depreciated by the MACRS method over a 3-year period. The machine was sold for $60,000 at the end of year 2, because the company decided to import the component made by the machine. If the company’s gross income was $1.4 million with operating expenses of $500,000, what was the tax liability in year 2 for an effective tax rate of 35%?Freeman Engineering paid $40,000 for specialized equipment for use with their new global positioning system/geographic information system (GPS/GIS). The equipment was depreciated over a 3-year recovery period using Modified Accelerated Cost Recovery System (MACRS) depreciation. The company sold the equipment after 2 years for $8,000 when it purchased an upgraded system. Determine the amount of the depreciation recapture or capital loss involved in selling the asset. The amount of capital loss is determined to be $____