H8. A piece of equipment has a capital investment of $1,140,000 and an annual operating expense of $115,500. The life of the equipment is 10 years, the effective income tax rate is 40%, and the after-tax MARR is 9% per year. The equipment qualifies for seven-year MACRS (GDS) properties. Perform after-tax PW analysis.
Q: A radio service panel truck initially cost P560,000. Its resale value at the end of the 5th year of…
A: Given: initial Cost=P 560000 Resale value= P 150000 To find: The depreciation charge for the second…
Q: An ice plant in Pampanga is delivering ice blocks in a small retail shop in Pangasinan. The selling…
A: We are going to solve this question by finding break even units of stocks to be sold.
Q: Which of the following is NOT a valid valuation method for tax purposes: Select one: Special…
A: A taxpayer adopting the Last in First out (LIFO) approach for tax reasons must typically utilise the…
Q: A broadcasting corporation was formed duly approved by the Securities and Exchange Commission has a…
A: The redemption period is defined as the period during which the value of the initial investment is…
Q: A subsidiary of AEP places in service electric generating and transmissionequipment at a cost of…
A: ANSWER Electricity generating and transmission equipment falls in the asset class of 00.4…
Q: A granary has two options for a conveyor used in the manufacture of grain for transporting, filling,…
A: Annual worth is calculated by present value of annuity formula. Present value of cash flows from the…
Q: A device costs P20,000. After 7 years, it is expected to be worth P6,000. Using the SL method, find…
A: Depreciation simply means fall in the value of assets. There are various methods to calculate…
Q: Approximate the after-tax ROR on a project that had a first cost of $500,000, a salvage value of 20%…
A: Amount received after fifth year = (20% x 500000) + 230000 = 100000 + 230000 = 330000 Year…
Q: Ocean Tide Industries is planning to introduce a new product with a projected life of eight years.…
A: Given, Government subsidy = 2000000 Initial equipment cost = 14000000 Initial working capital =…
Q: All of the following statements about the Alternative Depreciation System (ADS) are true, except:…
A: Que. All of the following statements about the AlternativeDepreciation System (ADS) are true,…
Q: projected to be 65,000 units per year. Price per hit is $63, variable cost per unit is $42, and…
A: The term depreciation refers to an accounting method used to allocate the cost of a tangible or…
Q: An investment of $1.000.000 will be included in the 7-year MACRS class for depreciation. It would…
A:
Q: A small manufacturing company has an estimated annual taxable income of $195,000. Due to an increase…
A: (a) 5 years MACRS depreciation rate in 1st year is 0.2 percent. Depreciation (D) of the machine…
Q: A granary has two options for a conveyor used in the manufacture of grain for transporting, filling,…
A: Given information Two Conveyor Conveyor 1: Initial investment =$75000 Operational cost=$17000…
Q: An oil refinery has decided to purchase some new drilling equipment for $550,000. The equipment will…
A: The recovery period of all the assets is determined by the GDS based on the asset classification of…
Q: An engineering firm purchased a second hand truck for P 530,000 and paid P 15,000 for freight and…
A: Given:- Purchase price=P530,000 Freight charge(Included in purchase price)=P15,000 Life=10 years…
Q: I need help in figuring out the step by step procedure, performing the operations and calculations…
A: EBITDA of old machine = $20,000 EBITDA of new machine = $40,000 Replacing the machine increases…
Q: Identify which of the following items are not included in the calculation of cash flow before taxes,…
A: The cash flow before taxes is the result of calculating the effective rental income plus other…
Q: A corporation in 2018 expects a gross income of $505,000, total operating expenses of $330,000, and…
A:
Q: Advise ABC Pty Ltd and Liberty Pty Ltd on the tax implications of the following arrangement. a. ABC…
A: Party Involved : 1. ABC Pty ltd (Owner of Property) 2. Liberty Pty ltd (Use of Property)
Q: Your firm is planning to install a new capping machine at the apple juice factory. This machine is…
A: Initial Cost = $500,000 Net Income = $150,000 for 4 years Salvage Value = $75,000 Federal tax rate =…
Q: Go Logistics, a small logistics company, is planning to invest in a fleet of delivery vehicles for…
A: (Q) Go Logistics, a small logistics company, is planning to invest in a fleet of delivery vehicles…
Q: A division of Midland Oil & Gas has a TI of $8.95 million for a tax year. If the state tax rate…
A: The tax amount for the taxable income up to $335,000 (TA) is $113,900.tax rate above the income…
Q: A granary has two options for a conveyor used in the manufacture of grain for transporting, filling,…
A: Given information Two Conveyor Conveyor 1: Initial investment =$80000 Operational cost=$17500…
Q: Two investments involving a virtual mold apparatus for producing dental crowns qualify for different…
A: Investment A: Cost = $54,900 Time = 9 years Annual operating cost = $150,000 3 year property class…
Q: A machine costs P1,800,000. It has a salvage value of P300,000 at the end of 5 years. If money is…
A: Equipment and machines lose some of their value over time due to wear and tear. Depreciation…
Q: A granary has two options for a conveyor used in the manufacture of grain for transporting, filling,…
A: Given that, Cost of asset = $70000 and $110000 Salvage value = $3000 and $4000 Useful life = 16…
Q: Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The…
A: Given information Alternative X Initial cost=8000 Annual Profit (GI-OE)=3500 per year Salvage…
Q: A cost of machine is P1,400,000 with a salvage value of P10,000 after 8 years. Determine the total…
A: Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life…
Q: All of the following are characteristics of a valueadded tax system, except: (a) Value-added taxes…
A: The Tax is a unilateral payment made by the people towards the government on various grounds such as…
Q: A granary has two options for a conveyor used in the manufacture of grain for transporting, filling,…
A: Given, The conveyor will be 10 yrs MACRS property Tax rate = 25% There will be depreciation…
Q: A granary has two options for a conveyor used in the manufacture of grain for transporting, filling,…
A: Given information Two Conveyor Conveyor 1: Initial investment =$90000 Operational cost=$14000…
Q: A certain newly created company installed a 10,000kW electric generating plant at a cost of P430 per…
A: Depreciation can be characterized as a proceeding, long-lasting and slow decline in the book value…
Q: has a cost of $53,600, lasts 9 years with no salvage value, and costs $150,000 per year in operating…
A:
Q: The General Service Contractor Company paid $400,000 for a house and lot. The value of the land was…
A: The information given is:- The General Service Contractor Company paid $400,000 for a house and lot.…
Q: A firm must decide between two designs. Their effective income tax rate is 15%, and MACRS…
A: Annual worth or AW is referred to as the easy way of understanding the annual amount, for instance,…
Q: A company paid $200,000 eight years ago for a specialized machine that has no salvage value and is…
A: Cost, in popular usage, is the financial worth of the goods and services that producers and…
Q: A company bought a generating set (or Genset) years ago at P5M and is now fully depreciated. It…
A: Given information Genset bought years ago at P5Million and now fully depreciated It is fixed now…
Q: The after-tax analysis for a $60,000 investment with associated gross income minus expenses (GI - E)…
A: If initial value, P and salvage value, S is nil, then the equation is : CFAT = (GI-E) - [(GI-E)-D] x…
Q: A corporation in 2018 expects a gross income of $430,000, total operating expenses of $330,000, and…
A: The U.S. government personal expense is a duty required by the Internal Revenue Service (IRS) on the…
Q: A company paid $200,000 eight years ago for a specialized machine that has no salvage value and is…
A: Marginal cost is the cost that the manufacturer spends to manufacture one more unit of the good. The…
Q: machine costs P7,000, last 8 years and has a salvage value at the end of life of ₱350. Determine the…
A: First cost of machine (FC) = P7,000 Salvage value (SV) = P350 Usual Life (n) = 8 years
Q: A granary has two options for a conveyor used in the manufacture of grain for transporting, filling,…
A: Annual worth is calculated by present value of annuity formula. Present value of cash flows from the…
Q: Weber Drilling Company is considering investing $20M in oil and gas drilling equipment. It is…
A: The present value of cash flows at the needed rate of return on your project relative to your…
Q: Peabody Corporation has the following base-case estimates for its new smallengine assembly project:•…
A: Hey, Thank you for the question. According to our policy we can only answer up to 3 sub parts per…
Q: A division of Midland Oil & Gas has a taxable income (TI) of $9.45 million for a tax year. If the…
A: Given, Taxable Income : $9,450,000Tax rate : 6%Before Tax Return : 22% per year
Q: Zhao Co. has fixed costs of $378,200. Its single product sells for $179 per units, and variable…
A: Variable prices change primarily based totally on the quantity of output produced. Variable prices…
Q: Carrolton Oil and Gas, an independent oil and gas producer, is approved to use a 20% of gross income…
A: Suppose, the usage is 20% of gross depletion allowance, the write- off last year was $700,000 and…
H8. A piece of equipment has a capital investment of $1,140,000 and an annual operating expense of $115,500. The life of the equipment is 10 years, the effective income tax rate is 40%, and the after-tax MARR is 9% per year. The equipment qualifies for seven-year MACRS (GDS) properties. Perform after-tax PW analysis.
Net present worth is defined as present value of the total cash flows over a period of time. In other words, it is the difference between the present value of cash inflow and cash outflow over a period of time.
Step by step
Solved in 2 steps with 1 images
- A vehicle include annual labor cost of $60,000 and annual revenue of $150,000. Using a service life of 10 years, determine the BTCF and ATCF at 21% federal and 6.5% state tax rate. Would you invest in your vehicle? (Establish and use your own MARR for PW, AW and ROR analysis)has a cost of $53,600, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3-year property class. Investment B has a cost of $84,500.00, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B, however, is in the 7-year property class. The company marginal tax rate is 25%, and MARR is an after-tax 10%. Based upon the use of MACRS-GDS depreciation, compare the AW of each alternative.AWA = $enter a dollar amount AWB = $enter a dollar amount Which should be selected? What must be Investment B's cost of operating expenses for these two investments to be equivalent? $enter a dollar amountPeachtree Construction Company, a highway contractor, is considering the purchase of a new trench excavator that costs 300000 and can dig a 3-foot-wide trench at the rate of 16 feet per hour. The contractor gets paid according to the usage of the equipment, 100 per hour. The expected average annual usage is 500 hours, and maintenance and operating costs will be 10 per hour. The contractor will depreciate the equipment by using a five-year MACRS, units-of-production method. At the end of five years, the excavator will be sold for 100000. Assuming the contractor’s marginal tax rate is 25% per year, determine the annual after-tax cash flow. In excel.
- A start-up biotech company is considering making an investment of $100,000 in a new filtration system. The associate estimates are summarized below: Annual receipts $75,000 Annual expenses $45,000 Useful life 8 years Terminal book value (EOY 8) $20,000 Terminal market value $0 Straight-line depreciation will be used, and the effective income tax rate is 20%. The after-tax MARR is 15% per year. Determine whether this investment is an attractive option for the company.An asset with a fixed investment cost of $90,000 is depreciated over an 8-year period. It is expected to have Sg = $30,000. MARR = 12% (My answers approximate to the nearest dollar) Using the Double DB method, what is D7? Within $10 of 5049 3365 8009 2670 4004 None of the aboveThe purchase of a motor for P6000 and a generator for P4000 will allow a company to produce its own energy. The configuration can be assembled for P500. The service will operate for 1600 hrs per year for 10yrs. The maintenance cost is P300 per year and the cost to operate is P0.85/hour for fuel and related costs. Using straight line depreciation, what is the annual cost(P) for the operation? There is P400 in salvage value for the system at the end of 10yrs.
- Kappa Holdings is looking at a new system with an installed cost of $740,000. This cost will be depreciated straight-line to zero over the project's 7-year life, at the end of which the system can be salvaged for $102,000. The system will save the firm $217,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $69,000, which will be returned at the end of the project. If the tax rate is 22 percent and the discount rate is 9 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPVSuppose you are considering an investment project that requires $800.000, has a six-year life, and has a salvage value of $100,000. Sales volume is projected to be 65,000 units per year. Price per unit is $63, variable cost per unit is $42, and fixed costs are $532,000 per year. The depreciation method is a five-year SL and assume MARR 10%. (a) Determine the break-even sales volume. (b) Calculate the cash flows of the base case over six years and its NPW. (c) lf the sales price per unit increases to $400, what is the required break-even volume? (d) Suppose the projections given for price, sales volume, variable costs, and fixed costs are all accurate to within + 15%. What would be the NPW figures of the best-case and worst-case scenarios?A start-up biotech company is considering making an investment of $100,000 in a new filtration system. The associated estimates are summarized below: Annual receipts $75,000 Annual expenses $45,000 Useful life 8 years Terminal book value (EOY 8) $20,000 Terminal market value $0 Straight-line depreciation will be used, and the effective income tax rate is 20% . The after-tax MARR is 15% per year. Determine whether this investment is an attractive option for the company.
- A certain newly created company installed a 10,000kW electric generating plant at a cost of P430 per kW. The estimated life of the plant is 15 years. Salvage value is conservatively set at x% of the first cost. The interest on the sinking fund deposit is 3.5%. The accumulated depreciation after 10 years is P2,483,595. a. What percentage of first cost is set as salvage value? b. How much should the electric generating plant be priced at the end of 8 years? c. If the salvage value is increased by 2%, what is the book value after 10 years?Henredon purchases a high-precision programmable router for shaping furniture components for $190,000. It is expected to last 12 years and have a salvage value of $5,000. It will produce $45,000 in net revenue each year during its life. Corporate income taxes are 40 percent, and the after-tax MARR is 10 percent. Determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR, if the router is kept for 12 years. After-tax PW: $enter a dollar amount rounded to the nearest dollar After-tax AW: $enter a dollar amount rounded to the nearest dollar After-tax IRR: enter percentages rounded to 1 decimal place % After-tax ERR: enter percentages rounded to 1 decimal placeHenredon purchases a high-precision programmable router for shaping furniture components for $190,000. It is expected to last 12 years and have a salvage value of $5,000. It will produce $45,000 in net revenue each year during its life. Corporate income taxes are 40 percent, and the after-tax MARR is 10 percent. Determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR, if the router is kept for 12 years.