An asset with a first cost of $13,000 is depreciated using the Modified Accelerated Cost recovery System (MACRS) over a 5-year period. The cash flow before taxes (CFBT) is estimated at $10,000 for the first 4 years and $5000 thereafter as long as the asset is retained. The effective tax rate is 33%, and the money is worth 11% per year. In present worth dollars, how much of the cash flow generated by the asset over its recovery period is lost to taxes? The present worth (PW) of CFBT is determined to be $ The present worth (PW) of CFAT is determined to be $ The difference between the two present worth (PW) values is determined to be $

An asset with a first cost of $13,000 is depreciated using the Modified Accelerated Cost recovery System (MACRS) over a 5-year period. The cash flow before taxes (CFBT) is estimated at $10,000 for the first 4 years and $5000 thereafter as long as the asset is retained. The effective tax rate is 33%, and the money is worth 11% per year. In present worth dollars, how much of the cash flow generated by the asset over its recovery period is lost to taxes? The present worth (PW) of CFBT is determined to be $ The present worth (PW) of CFAT is determined to be $ The difference between the two present worth (PW) values is determined to be $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

A machine is bought P420,000 with an economic life of 6 years and a salvage value of P50,000.The cost is 12% per year. if the first year depreciation is P105,714,what method of deprecation was used?
Mrs. Sally Selfish's company is considering a project that has a 10 year life and cost GHC 5000. It would save GHC 1.000 per year in operating cost and increase revenue by GHC 600 per year. It would be financed with a 10 year loan with an interest of 8% per year. The salvage value for the newly purchased equipment is zero. If the minimum annual rate of return (MARR) or hurdle rate is 14% and the tax rate is 25%, what is the net present value (NPV) of the project. Use the straight line method to calculate the depreciation.
The Philippine Society of Mechanical Engineers is planning to construct its own building. Two proposals are being considered: (a) The construction of the building now cost P400,000. (b) The construction of a smaller building now, to cost P300,000 and at the end of 5 years, an extension to be added to cost P200,000. Which proposal is more economical if interest is 20%, depreciation is disregarded and by how much?
An engineer bought an equipment for 500,000. He spent an additional amount of 35,000 for installation and other expenses. The estimated useful life of the equipment is 10 years. The salvage value is x% of the first cost. Using the straight line method of depreciation, the book value at the end of 5 years will be 291,500. What is the value of x? Draw the cashflow if necessary
Machinery for an assembly line has a cost basis of $150,000 and an expected salvage of $25,000. It is not subject to special limitations for bonus depreciation. How much bonus depreciation was, is, or will be allowed (a) in 2014? (b) in 2018? (c) in 2024? (d) in 2026?
Compare between the following two (After Tax cash flow) machines using internal rate of return Machine (A) Machine (B) First Cost (S) 80,000 200,000 Life (years) 5 10 analysis, present worth analysis, and annual worth Annual Cost ($) 18,000 6,000 Salvage value (S) 20,000 40,000 analysis:B/C; after tax analysis SL Depreciation method SL Tax Rate (%) 30 30 After tax MARR 10 10 (%)
Q5- You buy today a car 20,000 SR, after 8 year as useful life the deprecation is 20 % per year, what is the salvage (scrap) for your car?
If depreciation is $604 million and gross value is $800 million Find the value of net value
An iron ore of 50x10^6 ton was produced during 15 years and has been sold for $100 per ton Estimate the required investment if 0.4 turnover ratio was considered. If produced ton costs $28, what would be the net present value of the project when 8% safe rate and 15% rate of return assuming that the Investment will be depreciated within 15 years?
A time deposit of P150,000 for 31 days earns P900 on maturity date after deducting the 30% withholding tax on interest income. Find the rate of interest per annum
The purchase of a motor for P6000 and a generator for P4000 will allow a company to produce its own energy. The configuration can be assembled for P500. The service will operate for 1600 hrs per year for 10yrs. The maintenance cost is P300 per year and the cost to operate is P0.85/hour for fuel and related costs. Using straight line depreciation, what is the annual cost(P) for the operation? There is P400 in salvage value for the system at the end of 10yrs.
A small used delivery van can be purchased for $20,000. At the end of its useful life (8 years), the van can be sold for $3000. Determine the PW of the depreciation schedule based on 15% interest using:(a) Straight-line depreciation(b) Double declining balance depreciation(c) 100% bonus depreciation(d) MACRS depreciation