Question

Your firm needs a machine which costs $220,000, and requires $37,000 in maintenance for each year...

Your firm needs a machine which costs $220,000, and requires $37,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 35% and a discount rate of 16%. What is the depreciation tax shield for this project in year 3?

A $5,213.12

B $11,403.70

c $32,582

D $21,178

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Your firm needs a machine which costs $210,000, and requires $36,000 in maintenance for each year...
Your firm needs a machine which costs $210,000, and requires $36,000 in maintenance for each year of its 7 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 7-year class life category. Assume a tax rate of 40% and a discount rate of 15%. What is the depreciation tax shield for this project in year 7? Multiple Choice $5,509.35 $22,037 $36,729 $14,691.60
Your firm needs a machine which costs $130,000, and requires $28,000 in maintenance for each year...
Your firm needs a machine which costs $130,000, and requires $28,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 35% and a discount rate of 13%. If this machine can be sold for $13,000 at the end of year 3, what is the after tax salvage value? a) $11,821.55 b) $6,261 c) $3,367.00 d) $8,450.00
Your firm needs a computerized machine tool lathe which costs $50,000, and requires $12,000 in maintenance...
Your firm needs a computerized machine tool lathe which costs $50,000, and requires $12,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 35% and a discount rate of 12%. What is the project’s EAC assuming the machine is worthless at the end of year 3? a. –$ 6,881 b. –$12,049 c. –$14,771 d. –$22,715 e....
Your firm needs a computerized machine tool lathe which costs $53,000 and requires $12,300 in maintenance...
Your firm needs a computerized machine tool lathe which costs $53,000 and requires $12,300 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 34 percent and a discount rate of 12 percent. If the lathe can be sold for $5,300 at the end of year 3, what is the after-tax salvage value?
Depreciation Tax Shield Your firm needs a computerized machine tool lathe that costs $50,000 and requires...
Depreciation Tax Shield Your firm needs a computerized machine tool lathe that costs $50,000 and requires $12,000 in maintenance for each year of its three-year life. After three years, this machine will be replaced. The machine falls into the MACRS three-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 12 percent. Calculate the depreciation tax shield for this project in year 3...
Your firm needs a computerized machine tool lathe which costs $50,000 and requires $12,000 in maintenance...
Your firm needs a computerized machine tool lathe which costs $50,000 and requires $12,000 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 12 percent. If the lathe can be sold for $5,000 at the end of year 3,...
Your firm needs a computerized machine tool lathe which costs $45,000 and requires $5,500 in maintenance...
Your firm needs a computerized machine tool lathe which costs $45,000 and requires $5,500 in maintenance expense for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 25 percent and a discount rate of 12 percent. If the lathe can be sold for $6,300 at the end of year 3, what is the after-tax salvage value? The MACRS rates are...
A generator costs $150 and requires $80 in maintenance for each year of its 3 year...
A generator costs $150 and requires $80 in maintenance for each year of its 3 year life. After 3 years this generator will be replaced by a new one. The generator is straight-line depreciable to zero and has no salvage value. Assume a tax rate of 35 percent and a discount rate of 15 percent. What is the Operating Cash Flow (OCF) per year associated with the generator project? –$80.00 –$52.00 –$34.50 +$69.50 +$75.50
A generator costs $150 and requires $80 in maintenance for each year of its 3 year...
A generator costs $150 and requires $80 in maintenance for each year of its 3 year life. After 3 years this generator will be replaced by a new one. The generator is straight-line depreciable to zero and has no salvage value. Assume a tax rate of 35 percent and a discount rate of 15 percent. What is the Equivalent Annual Cost (EAC) of the generator? –$ 44.67 –$ 100.20 –$ 154.51 –$ 200.25 –$ 228.77
A 5-year project requires a $300,000 investment in a machine that is expected to worth $50,000...
A 5-year project requires a $300,000 investment in a machine that is expected to worth $50,000 when the project ends. Operating expenses are expected to be $75,000 in the first year and are expected to increase 3% per year over the life of the project. The appropriate discount rate is 8%, the company’s tax rate is 20%, and the CCA rate is 30%. What is the present value of the CCA tax shield?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT