Question

ABC, Inc purchased some new machinery three years ago for $270,743. Today, it is selling this machinery for $40,214. What is the After-tax Salvage Value of the new machinery? Assume that the tax rate is 29%. The MACRS allowance percentages are as follows, starting with Year 1: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

Answer #1

Particulars | Amount | |

a | Sale proceeds | 40,214 |

b | Less: net book value | 77,974 |

c=a-b | Gain/(loss) on disposal | -37,760 |

d= c*29% | tax benefit@ 29% | -10,950 |

e= c-d | After tax salvage value | -26,810 |

Net book value | ||

Particulars | Amount | |

cost of asset | 2,70,743 | |

Less: accumulated depreciation | 1,92,769 | |

Net book value | 77,974 | |

Accumulated depreciation | ||

Cost | 2,70,743 | |

Depreciation for 3 years: | ||

1st year rate | 20% | |

2nd year rate | 32% | |

3rd year rate | 19.2% | |

Total depreciation taken | 71.2% | |

Depreciation amount | 1,92,769 |

ABC Company purchased a new machinery 4 years ago for $68,721.
Today, it is selling this equipment for $20,792. What is the
after-tax salvage value if the tax rate is 23 percent?
The MACRS allowance percentages are as follows, commencing with
year one: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

Phil's Diner purchased some new equipment two years ago for
$118,679. Today, it is selling this equipment for $80,947. What is
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percent? The equipment falls in 5-year MACRS class. The MACRS
allowance percentages are as follows, commencing with year 1:
20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

Phil's Diner purchased some new equipment two years ago for
$102,274. Today, it is selling this equipment for $81,604. What is
the after-tax cash flow from this sale (in $) if the tax rate is 35
percent? The equipment falls in 5-year MACRS class. The MACRS
allowance percentages are as follows, commencing with year 1:
20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

ABC Company purchased $96,171 of equipment 4 years ago. The
equipment is 7-year MACRS property. The firm is selling this
equipment today for $4,624. What is the After-tax Salvage Value if
the tax rate is 35%? The MACRS allowance percentages are as
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A company is considering a new 6-year project that will have
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percent, and 5.76 percent, respectively. The company has a tax rate
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annual sales of $425,000 and costs of $293,000. The project will
require fixed assets of $525,000, which will be depreciated on a
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percent, and 5.76 percent, respectively. The company has a tax rate
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A company is considering a new 6-year project that will have
annual sales of $198,000 and costs of $122,000. The project will
require fixed assets of $241,000, which will be depreciated on a
5-year MACRS schedule. The annual depreciation percentages are
20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, 11.52
percent, and 5.76 percent, respectively. The company has a tax rate
of 34 percent. What is the operating cash flow for Year 2?
Multiple Choice
$65,892
$63,817
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