Suppose a corporation is allowed to depreciate a $10,000 asset over 4 years using, straight-line depreciation. Assume th...
Suppose a corporation is allowed to depreciate a $10,000 asset over 4 years using, straight-line depreciation. Assume that the discount rate is 10%. Suppose that the corporation pays a 35% tax on its profits every year. What is the present discounted value of the tax deduction from the depreciation— that is, what is the value today of the tax savings over the 4 years due to the depreciation allowance?
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Suppose a corporation is allowed to depreciate a $10,000 asset over 4 years using, straight-line depreciation. Assume th...
You bought a van two years ago for £10,000. You depreciate vans over four years on a straight-line basis. On selling...
You bought a van two years ago for £10,000. You depreciate vans over four years on a straight-line basis. On selling the van today, you made a gain on sale of £4,000. How much cash did you receive on selling the van Select one: a. £14,000 b. £4,000 O c. £9,000 d. £5,000
A company purchases an asset that costs $10,000. This asset qualifies as 3-year property under MA...
A company purchases an asset that costs $10,000. This asset qualifies as 3-year property under MACRS. The company uses an after-tax discount rate of 15% and faces a 40% income tax rate. (a) Use the appropriate present value factors found in Appendix C, Table 1, to determine the present value of the depreciation deductions for this firm over the specified four-year period. Refer to Exhibit 12.4. (Round "MACRS %" to 2 decimal places (i,e. 0.1234 = 12.34%), "PV factor" to...
A company purchases an asset that costs $10,000. This asset qualifies as 3-year property under MACRS....
A company purchases an asset that costs $10,000. This asset qualifies as 3-year property under MACRS. The company uses an after-tax discount rate of 15% and faces a 40% income tax rate. (a) Use the appropriate present value factors found in Appendix C, Table 1, to determine the present value of the depreciation deductions for this firm over the specified four-year period. Refer to Exhibit 12.4. (Round "MACRS %" to 2 decimal places (i,e. 0.1234 = 12.34%), "PV factor" to...
depreciated using the straight-line method over 8 years. The tax rate is 35 percent and the...
depreciated using the straight-line method over 8 years. The tax rate is 35 percent and the discount rate is 16 percent. If the machine is sold today for $74,500, what will be the after-tax salvage value?
12) asset investment of $1.0 million. The fixed asset will be depreciated straight-line to zero over...
12) asset investment of $1.0 million. The fixed asset will be depreciated straight-line to zero over its four-year tax life, after which time it will have a zero market value. The project is estimated to generate S1500,000 in annual sales, with costs of $1,200,000. The tax rate is 40 percent and the required return for the project is 10 percent. What is the net present value? StarShine is considering a new four-year expansion project that requires an initial fixed A)...
2. A company using straight-line depreciation purchases an asset for $6,000 and is depreciating this asset...
2. A company using straight-line depreciation purchases an asset for $6,000 and is depreciating this asset to zero over its three year tax life. The company's tax rate is 30%, if the company ends the project after two years and sells this equipment for $500, what will be the after-tax cash flow from the sale of this asset? (ANSWER $950) Then How to calculate book value?
GIPI will depreciate the gymnasium building using the straight-line method over 10 years with a residual...
GIPI will depreciate the
gymnasium building using the straight-line method over 10 years
with a residual value of $5,000. Gym equipment will be depreciated
using the double-declining-balance method, with an estimated
residual value of $4,500 at the end of its four-year useful life.
Record depreciation on 1/31 equal to one-twelfth the yearly amount.
Record the transaction. -The General journal below is wrong when i
clicked on check answer, if someone could correct it that would be
great, thank you!
Grid...
1. XYZ is considering a project with the following data: Sales Revenue = $500,000 Pre-tax Cannibalization cost = $50,000 Asset Cost = $450,000 Straight line depreciation over 3 years with zero salvage...
1. XYZ is considering a project with the following data: Sales Revenue = $500,000 Pre-tax Cannibalization cost = $50,000 Asset Cost = $450,000 Straight line depreciation over 3 years with zero salvage value Operating costs = $250,000 (does not include depreciation) Tax Rate 21% a. What is the after-tax cash flow? Assume a cost of capital of 10% and that the cash flows are constant for 3 years. What is the NPV? b. What is the NPV if we need...
A machine cost $80,000. Depreciation is calculated straight line equal amounts over 4 years. Every year...
A machine cost $80,000. Depreciation is calculated straight line equal amounts over 4 years. Every year the machine increases cash flows by an amount of $30,000. Taxes, Opportunity Cost have all been accounted for in this number. There is not net working capital. After 3 years when the machine has only been depreciated for 3 years and therefore the book value is not zero, the machine is sold for $30,000. This, therefore is a 3 year project. The rate of...
An asset costs $100,000 and is depreciated straight-line to zero over its 4 year life. The...
An asset costs $100,000 and is depreciated straight-line to zero over its 4 year life. The asset will be used for a three-year project and after 3 years it will be sold for $30,000. If the tax rate is 35%, what is the after-tax cash flow from the sale of the asset? $28,750 $15,250 $34,750 $30,000
You bought a van two years ago for £10,000. You depreciate vans over four years on a straight-line basis. On selling the van today, you made a gain on sale of £4,000. How much cash did you receive on selling the van Select one: a. £14,000 b. £4,000 O c. £9,000 d. £5,000
12) asset investment of $1.0 million. The fixed asset will be depreciated straight-line to zero over its four-year tax life, after which time it will have a zero market value. The project is estimated to generate S1500,000 in annual sales, with costs of $1,200,000. The tax rate is 40 percent and the required return for the project is 10 percent. What is the net present value? StarShine is considering a new four-year expansion project that requires an initial fixed A)...
2. A company using straight-line depreciation purchases an asset for $6,000 and is depreciating this asset to zero over its three year tax life. The company's tax rate is 30%, if the company ends the project after two years and sells this equipment for $500, what will be the after-tax cash flow from the sale of this asset? (ANSWER $950) Then How to calculate book value?
GIPI will depreciate the
gymnasium building using the straight-line method over 10 years
with a residual value of $5,000. Gym equipment will be depreciated
using the double-declining-balance method, with an estimated
residual value of $4,500 at the end of its four-year useful life.
Record depreciation on 1/31 equal to one-twelfth the yearly amount.
Record the transaction. -The General journal below is wrong when i
clicked on check answer, if someone could correct it that would be
great, thank you!
Grid...
An asset costs $100,000 and is depreciated straight-line to zero over its 4 year life. The asset will be used for a three-year project and after 3 years it will be sold for $30,000. If the tax rate is 35%, what is the after-tax cash flow from the sale of the asset? $28,750 $15,250 $34,750 $30,000
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