What is the expected after-tax cash flow from selling a piece of equipment if XYZ purchases the equipment today for $89,700.00, the tax rate is 30.00%, the equipment is sold in 3 years for $16,000.00 and MACRS depreciation is used where the depreciation rates in years 1, 2, 3, and 4 are 40.00%, 35.00%, 20.00%, and 5.00%, respectively? O $3,140 (plus or minus $10) O $12,546 (plus or minus $10) O $11,200 (plus or minus $10) O $1,031 (plus or minus $10) O None of the above is within $10 of the correct answer

What is the expected after-tax cash flow from selling a piece of equipment if XYZ purchases the equipment today for $89,700.00, the tax rate is 30.00%, the equipment is sold in 3 years for $16,000.00 and MACRS depreciation is used where the depreciation rates in years 1, 2, 3, and 4 are 40.00%, 35.00%, 20.00%, and 5.00%, respectively? O $3,140 (plus or minus $10) O $12,546 (plus or minus $10) O $11,200 (plus or minus $10) O $1,031 (plus or minus $10) O None of the above is within $10 of the correct answer

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose you sell a fixed asset for $125,000 when its book value is $139,000. If your company's marginal tax rate is 30%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)? Group of answer choices a. $120,080 b. $129,200 c. $9,800 d. $14,000
Assume that you calculated the ATER after year 3 as $275,000, the after-tax cash flow in year 4 was $6,800 and grew by 3% until year 8, and the ATER in year 8 was $300,000. Use this information to calculate the incremental IRR for not selling the property and collecting rents for years 4-8. What is the incremental IRR for not selling the property? A. 2.88% B. 4.29% C.-41.90% D. 6.40%
K You have a depreciation expense of $546,000 and a tax rate of 22%. What is your depreciation tax shield? The depreciation tax shield will be $ (Round to the nearest dollar.)
Economics Please clarify this Economic question but don't use excel. Luki-Liku Co. purchases an asset for $100,000 with an estimated life of 5 years and a salvage value of zero. The company’s profit per year will be $30,000 before depreciation and taxes. If the annual tax rate applicable to this activity is 30% and the after-tax MARR is 12% per year, calculate the present worth of the after-tax cash flows when (a) the straight-line depreciation is used, and (b) the double-declining balance depreciation is used.
You have been asked to estimate the market value of an income-producing property. The table below provides 5 years of projected cash flows for the property. Use the discounted cash flow approach to income valuation to calculate the market value. Assume that you sell the property at the end of year 5 and that the net proceeds from the sale are $5 million. Also assume that the discount rate is 10%. PGI EGI NOI Year 1 $4.18 million $750,000 $780,000 $811,200 $637,500 $663,000 $689,520 $318,750 $331,500 $344,760 $6.11 million $4.12 million Year 2 $4.40 million Year 3 Year 4 $843,648 $717,101 $358,550 Year 5 $877,394 $745,785 $372,892
What is the expected after-tax cash flow from selling a piece of equipment if TwoPlus purchases the equipment today for $143,000.00, the tax rate is 23.00 percent, the equipment is sold in 2 years for $36,500.00, 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? O $17,102.80 (plus or minus $10) $37,643.10 (plus or minus $10) $50,470.20 (plus or minus $10) $43,892.20 (plus or minus $10) None of the above is within $10 of the correct answer
Homer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net Income after tax of $169,650. The equipment will have an initial cost of $585,000 and have a 5-year life. If the salvage value of the equipment is estimated to be $25,000, what is the annual net cash flow? Multiple Choice $144,650 $57,650 $281650 $194,650
Nelson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $105,000. The equipment will have an initial cost of $420,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $80,000, what is the payback period? Ignore income taxes. Multiple Choice 3.24 years 4.00 years 4.76 years 7.00 years
Suppose you sell a fixed asset for $10,000 when its book value is $2,000. If your company's marginal tax rate is 21 percent, what will be the effect on cash flows of this sale (i.e., what will be the after - tax cash flow of this sale )? Multiple Choice $3, 680 $8, 320 $420 $6,500
In year 0 you purchase an asset for $500,000 and in year 1 you receive a positive cash flow of $100,000 from operating the asset. Following a MACRS 7-year depreciation schedule (year 1 recovery rate of 14.29 percent) and assuming you are in a 39% tax bracket, what is your year 1 after tax cash flow (ATCF) to the nearest $50 ? O a) $88,750 O b) $28,550 c) $400,000 O d) $380,750 O e) $11,250
QUESTION 1 A new machine is to be purchased for $200,000. The company believes it will generate $75,000 annually in revenue due to the purchase of this machine. The company will have to train an operator to run this machine and this will result in additional labor expenses of $25,000 annually. The new machine will be depreciated using 5 years MACRS, even though the life of the project is 7 years, and the salvage value is estimated to be $0 at the end of year 7. The tax rate is 40% and the company's MARR is 15%.
Problem 3. Malipol Books is considering the purchase of a new binding equipment that will reduce operating costs. The cost of the equipment will be Php 70,000, which will be depreciated straight line over 5 years to a zero-salvage value. Sales are expected to increase Php 65,000 per year, with an expected cash flow earnings before depreciation and taxes/sales ratio of 60%. What is the expected after-tax cash flows from the project if the tax rate is 40%?

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