Question

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.

Answer #1

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.

Phil's Diner purchased some new equipment two years ago for
$118,679. Today, it is selling this equipment for $80,947. What is
the after-tax cash flow from this sale (in $) if the tax rate is 28
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
follows, commencing with year one: 14.29, 24.49, 17.49, 12.49,
8.93, 8.92, 8.93, and 4.46 percent.

A company is considering a new 6-year project that will have
annual sales of $207,000 and costs of $128,000. The project will
require fixed assets of $247,000, 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?

Pear Orchards is evaluating a new project that will require
equipment of $227,000. The equipment 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, and
11.52 percent, respectively. The company plans to shut down the
project after 4 years. At that time, the equipment could be sold
for $52,800. However, the company plans to keep the equipment for a
different project in another state. The tax rate is...

A company is evaluating a new 4-year project. The equipment
necessary for the project will cost $3,800,000 and can be sold for
$745,000 at the end of the project. The asset is in the 5-year
MACRS class. The depreciation percentage each year is 20.00
percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52
percent, respectively. The company's tax rate is 34 percent. What
is the aftertax salvage value of the equipment?

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
$76,381
$52,061
$59,599

A company is considering the purchase
of a $200,000 piece of equipment. The equipment is classified as
5-year MACRS property. The company expects to sell the equipment
after five years at a price of $30,000. The relevant tax rate is
20%. What is the after-tax cash flow from this sale?
MACRS 5-year property
Year Rate
1 20.00%
2 32.00%
3 19.20%
4 11.52%
5 11.52%
6 5.76%

King Nothing is evaluating a new 6-year project that will have
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
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 35 percent. What is the operating cash flow for Year 3?

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