Question

business fundamentals class

Question 9 (1 point) A high precision programmable router for shaping furniture components is purchased by Henredon for $105000. It is expected to last 12 years and have a salvage value of $3500. It is considered a MACRS 7 year property. It will produce $34000 in net revenue each year during its life. Corporate income taxes are 0.33 and the after-tax MARR is 0.14. What is the Taxable income for year 1? Your Answer: Answer Question 10 (1 point) A high precision programmable router for shaping furniture components is purchased by Henredon for $160000. It is expected to last 12 years and have a salvage value of $6500. It is considered a MACRS 7 year property. It will produce $48000 in net revenue each year during its life. Corporate income taxes are 0.39 and the after-tax MARR is 0.18. What is the ATCF for year 2? Your Answer: Answer

Answer 1

Question 9

MACRS rate = 14.29%. Therefore, depreciation for year 1 = (105000-3500 = 101,500)*14.29% = 14,504

Taxable Income = 34,000 - 14,504 = 19,496

Quetion 10

MACRS Rate year 1 = 14.29% year 2 = 24.49%

Therefore depreciation for year 1 = (160000-6500= 153,500)*14.29% = 21,935 ; Year 2 = 153,500*24.49% = 37,592

AFter tax cash flow Year 2 = (48,000 - 37,592)(1-0.39) = 6,349