Question

Your firm purchased machinery for $9.4 million and received immediate 100% bonus depreciation. The project, will...

Your firm purchased machinery for $9.4 million and received immediate 100% bonus depreciation. The project, will end after 5 years. If the equipment can be sold for $3.9 million at the completion of the project, and your firm’s tax rate is 21%, what is the after-tax cash flow from the sale of the machinery? (Enter your answer in millions rounded to 4 decimal places.)

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Answer Statement Computing After tax Cash Flows from Machinery
Sale Proceeds 3.9000
Less Book Value 0.0000 (Since the Machinery is Entitled for 100% Bonus Depreciation)
Capital Gain on sale 3.9000
Less Tax @21% 0.8190
Net Cash Flow from sale of Machinery 3.0810
Hence the After tax Cash flow from Machinery sale = $3.0810 Million
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
A firm had after-tax income last year of $2.1 million. Its depreciation expenses were $0.5 million,...
A firm had after-tax income last year of $2.1 million. Its depreciation expenses were $0.5 million, and its total cash flow was $2.1 million. What happened to net working capital during the year? (Enter your answer in millions rounded to 1 decimal place.)
Your firm is considering a project that would require purchasing  $7.9 million worth of new equipment. Determine...
Your firm is considering a project that would require purchasing  $7.9 million worth of new equipment. Determine the present value of the depreciation tax shield associated with this equipment if the​ firm's tax rate is  20% using the MACRS depreciation with a​ five-year recovery period and starting immediately. Note that because the depreciation tax shield is essentially a riskless cash flow​ (assuming the​ firm's tax rate remains​ constant), the appropriate cost of capital to evaluate the tax benefit from depreciation is the​...
Your company is considering a new project that will require $978,000 million of new equipment at...
Your company is considering a new project that will require $978,000 million of new equipment at the start of the project. The equipment will have a depreciable life of 10 years and will be depreciated to a book value of $148,000 using straight-line depreciation. Neither bonus depreciation nor Section 179 expensing will be used. The cost of capital is 13 percent, and the firm’s tax rate is 21 percent. Estimate the present value of the tax benefits from depreciation. (Round...
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...
Butterfly Tractors had $17.00 million in sales last year. Cost of goods sold was $8.60 million,...
Butterfly Tractors had $17.00 million in sales last year. Cost of goods sold was $8.60 million, depreciation expense was $2.60 million, interest payment on outstanding debt was $1.60million, and the firm’s tax rate was 35%. A. What would happen to net income and cash flow if depreciation were increased by $1.60 million? (Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.) Net income would be by million Cash...
PC Shopping Network may upgrade its modem pool. It last upgraded 2 years ago, when it...
PC Shopping Network may upgrade its modem pool. It last upgraded 2 years ago, when it spent $135 million on equipment with an assumed life of 5 years and an assumed salvage value of $30 million for tax purposes. The firm uses straight-line depreciation. The old equipment can be sold today for $100 million. A new modem pool can be installed today for $180 million. This will have a 3-year life and will be depreciated to zero using straight-line depreciation....
The MoMi Corporation’s cash flow from operations before interest, depreciation and taxes was $1.5 million in...
The MoMi Corporation’s cash flow from operations before interest, depreciation and taxes was $1.5 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 15% of pretax cash flow each year. The tax rate is 21%. Depreciation was $210,000 in the year just ended and is expected to grow at the same rate as the operating cash flow....
Tannen Industries is considering an expansion. The necessary equipment would be purchased for $19 million and...
Tannen Industries is considering an expansion. The necessary equipment would be purchased for $19 million and will be fully depreciated at the time of purchase, and the expansion would require an additional $1 million investment in net operating working capital. The tax rate is 25%. What is the initial investment outlay after bonus depreciation is considered? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar. Enter your answer...
Tannen Industries is considering an expansion. The necessary equipment would be purchased for $17 million and...
Tannen Industries is considering an expansion. The necessary equipment would be purchased for $17 million and will be fully depreciated at the time of purchase, and the expansion would require an additional $4 million investment in net operating working capital. The tax rate is 25%. What is the initial investment outlay after bonus depreciation is considered? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar. Enter your answer...
Tannen Industries is considering an expansion. The necessary equipment would be purchased for $14 million and...
Tannen Industries is considering an expansion. The necessary equipment would be purchased for $14 million and will be fully depreciated at the time of purchase, and the expansion would require an additional $3 million investment in net operating working capital. The tax rate is 25%. What is the initial investment outlay after bonus depreciation is considered? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar. Enter your answer...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT