Need all three parts.....don't attempt if you will not solve all three parts The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipmentit originally purchased for $301,000.a. What is the book value of the equipment?b. If Jones sells the equipment today for $180,000 and its tax rate is 21%, what is the after-tax cash flow from sellingit?c. Just before it is about to sell the equipment, Jones receives a new order. It can take the new order if it keeps theold equipment. Is there a cost to taking the order and if so, what is it? Explain. (Assume the new order will consumethe remainder of the machine's useful life.)Note Assume that the equipment is put into use in year 1.GOEDa. What is the book value of the equipment?The book value of the equipment after the third year is $(Round to the nearest dollar.)b. If Jones sells the equipment today for $180,000 and its tax rate is 21%, what is the after-tax cash flow from sellingit?The total after-tax proceeds from the sale are $(Round to the nearest dollar.)c. Just before it is about to sell the equipment, Jones receives a new order. It can take the new order if it keeps theold equipment. Is there a cost to taking the order and if so, what is it? Explain. (Assume the new order will consumethe remainder of the machine's useful life.) (Select the best choice below)OA. Yes, the cost of taking the order is the extra depreciation on the machine.O B. No, Jones already owns the machine, so there is no cost to using it for the order.OC. Yes, the cost of taking the order is the lost after-tax cash flow of $160,404 from selling the machine.OD. Yes, the cost of taking the order is the lost $86,688 in book value.

a.Cost of equipment = $301,000 The accumulated depreciation on the equipment is The book value of…

The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $301,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $180,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? c. Just before it is about to sell the equipment, Jones receives a new order. I can take the new order if it keeps the old equipment. Is there a cost to taking the order and if so, what is it? Explain. (Assume the new order will consume the remainder of the machine's useful life.) Note Assume that the equipment is put into use in year 1.

The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $301,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $180,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? c. Just before it is about to sell the equipment, Jones receives a new order. I can take the new order if it keeps the old equipment. Is there a cost to taking the order and if so, what is it? Explain. (Assume the new order will consume the remainder of the machine's useful life.) Note Assume that the equipment is put into use in year 1.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 22P: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,...

See similar textbooks

Similar questions

The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $299,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $178,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. *** a. What is the book value of the equipment? The book value of the equipment after the third year is $. (Round to the nearest dollar.)
2. The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $302,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $184,000and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. a. What is the book value of the equipment? The book value of the equipment after the third year is $____ (Round to the nearest dollar.) b. If Jones sells the equipment today for $184,000 and its tax rate is 21%, What is the after-tax cash flow from selling it? The total after-tax proceeds from the sale will be $____ (Round to the nearest dollar.)
What is the expected after - tax cash flow from selling a piece of equipment if Probst purchases the equipment today for $548, 860.00, the tax rate is 39.9 percent, the equipment will be sold in 3 years for $98, 800.00, and the equipment will be depreciated to $72, 600.00 over 12 years using straight - line depreciation? $106, 885.74 (plus or minus $10) $262, 538.29 (plus or minus $10) - $72, 688.20 (plus or minus $10) $230,867.00 (plus or minus $10) None of the above is within $10 of the correct answer
Sussman industries purchased a drilling machine for $50,000 and paid cash. Sussman expects to use the machine for ten years after which it will have no value. It will be depreciated straight-line over the ten years. Assume a marginal tax rate of 40%. What are the cash flows associated with the machine?A. At the time of purchase?b. In each of the following ten years?
Garrison Corporation is considering the replacement of an old machine that is currently being used. The old machine has a book value of $28,000. If Garrison decides to replace the old machine, Picco Company has offered to purchase it for $60,000 on the replacement date. Garrison has a tax rate of 40%. What is the after-tax cash flow associated with the salvage ofthe old machine? A. $32,000B. $36,000C. $47,200D. $40,800
ABC, Inc. is considering the purchase of a $116,000 piece of equipment. The equipment is classified as 5-year MACRS property. The company expects to sell the equipment after two years at a price of $50,000. The tax rate is 35 percent. What is the expected after-tax cash flow from the anticipated sale?
HaulCo is considering the purchase of a truck. Over its five year life, it will provide net revenues of $17,000 per year at an initial cost of $72,000 and a salvage value of $21,000. HaulCo pays 35% in taxes, the CCA rate for trucks is 30%, and the after tax MARR is 12%. (a) What is the after tax annual cost or worth of this purchase? (b) Should HaulCo pursue this project? Why or why not?
Easter Corporation will replace one of its assets with an updated model. The current asset was purchased two years ago at a cost of $70,000. It has been depreciated under MACRS using a five-year recovery period. The company can sell this existing asset for $30,000. The new asset is going to cost $80,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on both ordinary income and capital gains, the initial investment will be equal to what amount after adjusting for taxes?
NUBD Co. purchase a machine for P180,000, which will be depreciated on the straight-line basis over a five year period with no salvage value. The related cash flow from operations, net of income taxes, is expected to be P40,000, a year. Assume that NUBD’s effective income tax rate is 40% for all years.What is the payback period?
Baird Bros. Construction is considering the purchase of a machine at a cost of $202,000. The machine is expected to generate cash flows of $37,000 per year for 10 years and can be sold at the end of 10 years for $27,000. Interest is at 11%. Assume the machine purchase would be paid for on the first day of year one, but that all other cash flows occur at the end of the year. Ignore income tax considerations. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:a. What is the net present value of the cash flows?b. Determine whether Baird should purchase the machine.
Marshall-Miller & Company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 4 years and then to sell it for $15.500. If the marginal tax rate is 20%, what will the after-tax salvage value be when the machine is sold at the end of Year 4? Depreciation Rate 0.20 0.32 Year 1 2 3 4 56 0.19 0.12 0.11 0.00
Marshall-Miller & Company is considering the purchase of a new machine for $60,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 5 years and then to sell it for $18,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 5? Complete the table -THIS QUESTION WILL BE ON THE FINAL EXCEPT WITH DIFFERENT NUMBERS. You will fill in the entire table. I am giving you a few numbers to help you check your work Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 MACRS % 20% 32% 19% 12% 11% 6% 7,200 Depreciation expense Book value 48,000 3,600 $0 If we sell at the end of year 5 for $18,500 then determine if we have a gain or a loss and the appropriate tax consequence Gain of 14,900 tax owed is $5,960