Question

Please show all work

You purchased a machine for$1.09million three years ago and have been applying straight-line depreciation to zero for a seven-year life. Your tax rate is 25%.If you sell the machine today (after three years of depreciation) for $721,000,

what is your incremental cash flow from selling the machine?

Answer #1

1] | Cost of the machine | $ 1,090,000 |

Annual depreciation = 1090000/7 = | $ 155,714 | |

Accumulated depreciation = 155714*3 = | $ 467,143 | |

Book value on date of sale [1090000-467143] | $ 622,857 | |

2] | Sale price of the machine today | $ 721,000 |

Gain on sale = 721000-622857 = | $ 98,143 | |

Tax on gain = 98143*25% = | $ 24,536 | |

3] |
Incremental cash flow on
sale = 721000-24536
= |
$
696,464 |

You purchased a machine for $1.18 million three years ago and
have been applying straight-line depreciation to zero for a
seven-year life. Your tax rate is 38%. If you sell the machine
today (after three years of depreciation) for $798,000, what is
your incremental cash flow from selling the machine?

You purchased a machine for $1.13 million three years ago and
have been applying straight-line depreciation to zero for a
seven-year life. Your tax rate is 21%. If you sell the machine
today (after three years of depreciation) for $729,000, what is
your incremental cash flow from selling the machine?

You purchased a machine for $1.02 million three years ago and
have been applying straight-line depreciation to zero for a
seven-year life. Your tax rate is 35%. If you sell the machine
today (after three years of depreciation) for $750,000, what is
your incremental cash flow from selling the machine?
a. Your total incremental cash flow will be $_____(Round to
the nearest cent.)

1. You purchased a machine for $ 1.16 million three years ago
and have been applying straight-line depreciation to zero for a
seven-year life. Your tax rate is 38 %. If you sell the machine
today (after three years of depreciation) for $ 775 000 what is
your incremental cash flow from selling the machine? Your total
incremental cash flow will be $ nothing. (Round to the nearest
cent.)
2. Daily Enterprises is purchasing 10.3 million machines. It
will cost...

The Tomak Company purchased a machine three years ago for
$160,000. It is being depreciated on a straight-line basis over an
eight-year life to a zero salvage value. This particular machine
was purchased because the firm anticipated a high level of
production that never materialized. The firm is considering selling
this machine and purchasing a smaller model. It could sell this
machine today for its book value of $100,000.
The smaller model costs $50,000, including installation costs,
and would be...

Vector Corporation purchased a machine seven years ago at a cost
of $840,000. The machine is being depreciated using the
straight-line method over ten years. The tax rate is 25 percent and
the discount rate is 8 percent. If the machine is sold today for
$305,000, what will the aftertax salvage value be?
$349,300
$276,400
$337,210
$303,420
$291,750

Three years ago you bought a machine for $1,000. You expected to
use it for 10 years, and you have been depreciating it over a
10-year life using the straight-line method and an expected salvage
value of $0. It is now Time 3, and you are going to sell the
machine. What is the tax consequence for each of the possible sales
prices below? The ordinary income tax rate is 25%, and the capital
gains tax rate is 20%.
What...

DISCUSS QUESTION #4 The Oxford Equipment Company purchased a
machine 5 years ago at a cost of $85,000. The machines expected
life is 10 years and is being depreciated by the straight-line
method at a rate of $8,500 per year. If the machine is kept, it can
be sold for $15,000 at the end of its expected life. A new machine
can be purchased for $170,000. It has an expected life of 5 years
and will reduce cash operating expenses...

One year ago, your company purchased a machine used in
manufacturing for $110,000. You have learned that a new machine is
available that offers many advantages and you can purchase it for
$160,000 today. It will be depreciated on a straight-line basis
over 10 years and has no salvage value. You expect that the new
machine will produce a gross margin (revenues minus operating
expenses other than depreciation) of $45,000 per year for the next
10 years. The current machine...

One year ago, your company purchased a machine used in
manufacturing for $ 110,000. You have learned that a new machine is
available that offers many advantages and you can purchase it for $
170,000 today. It will be depreciated on a straight-line basis
over 10 years and has no salvage value. You expect that the new
machine will produce a gross margin (revenues minus operating
expenses other than depreciation) of $ 60,000 per year for the
next 10 years....

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 15 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago