Homework Answers
Solution :
The present value of depreciation tax shield = $ 54,378.76
Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.
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A firm buys a piece of equipment for $183,910.00 and will straight-line depreciate it to zero...
A firm buys a piece of equipment for $169,485.00 and will straight-line depreciate it to zero...
A firm buys a piece of equipment for $169,485.00 and will straight-line depreciate it to zero over five years. If the tax rate is 39.00%, what is the present value of the depreciation tax shield if the cost of capital is 11.00%?
Taylor United is considering overhau ling its equipment to meet increased demand for its product. The...
Taylor United is considering overhau ling its equipment to meet increased demand for its product. The cost of equipment overhaul is $3.80 million, plus $209,461.00 in installation costs. The firm will straight-line depreciate the equipment to zero using a 5-year recovery period. Additional sales from the overhaul should amount to $209,926.00 per year, and #13 unanswered not_submitted additional operating expenses and other costs (excluding depreciation) will amount to 36.00% of the additional sales. The firm has an ordinary tax rate...
C and D please Your firm is considering a project that would require purchasing $7.6 million...
C and D please
Your firm is considering a project that would require purchasing $7.6 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 37%, the appropriate cost of capital is 10%, and the equipment can be depreciated: a. Straight-line over a ten-year period, with the first deduction starting in one year. b. Straight-line over a five-year period, with the first deduction starting in one...
Daily Enterprises is purchasing a $10.57 million machine. It will cost $74,841.00 to transport and install...
Daily Enterprises is purchasing a $10.57 million machine. It will cost $74,841.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.25 million per year along with incremental costs of $1.16 million per year. Daily's marginal tax rate is 38.00 %. The cost of capital for the firm is 11.00% # 17 unanswered not submitted (answer in...
Markov Manufacturing recently spent $17.2 million to purchase some equipment used in the manufacture of disk drives. Th...
Markov Manufacturing recently spent $17.2 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five years, and its marginal corporate tax rate is 35%. The company plans to use straight-line depreciation. a. What is the annual depreciation expense associated with this equipment? b. What is the annual depreciation tax shield? c. Rather than straight-line depreciation, suppose Markov will use the MACRS depreciation method for the...
Daily Enterprises is purchasing a $10.55 million machine. It will cost $74,201.00 to transport and install...
Daily Enterprises is purchasing a $10.55 million machine. It will cost $74,201.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.36 million per year along with incremental costs of $1.24 million per year. Daily's marginal tax rate is 35.00% The cost of capital for the firm is 10.00% (answer in dollars..so convert millions to dollars) What...
Keira Knightley Company buys a piece of equipment for $36,442 that will last for 7 years....
Keira Knightley Company buys a piece of equipment for $36,442 that will last for 7 years. The equipment will generate cash flows of $7,000 per year and will have no salvage value at the end of its life. Ignore taxes unless told to include them. Using straight-line depreciation over the life of the asset, what is the after tax cash flow in year 3? Assume a 30% tax rate and that the original cash flow was before tax.
Markov Manufacturing recently spent $11.5 million to purchase some equipment used in the manufacture of disk...
Markov Manufacturing recently spent $11.5 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five years, and its marginal corporate tax rate is 21%. The company plans to use straight-line depreciation. a. What is the annual depreciation expense associated with this equipment? b. What is the annual depreciation tax shield? c. Rather than straight-line depreciation, suppose Markov will use the MACRS depreciation method for the...
An asset used in a four-year project falls in the five-year MACRS class for tax purposes....
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $7,232,094.00 and will be sold for $1,769,684.00 at the end of the project (End of the 4th year). If the tax rate is 39.00%, what is the after-tax salvage value of the asset? # 4 unanswered not submitted Submit Answer format: Currency: Round to: 2 decimal places
A piece of newly purchased industrial equipment costs $946,376.00 and is classified as a seven-year property...
A piece of newly purchased industrial equipment costs $946,376.00 and is classified as a seven-year property under MACRS. What is the book value of this piece of equipment at the end of year 3? unanswered Submit not_submitted Answer format: Currency: Round to: 2 decimal places.
Taylor United is considering overhau ling its equipment to meet increased demand for its product. The cost of equipment overhaul is $3.80 million, plus $209,461.00 in installation costs. The firm will straight-line depreciate the equipment to zero using a 5-year recovery period. Additional sales from the overhaul should amount to $209,926.00 per year, and #13 unanswered not_submitted additional operating expenses and other costs (excluding depreciation) will amount to 36.00% of the additional sales. The firm has an ordinary tax rate...
C and D please
Your firm is considering a project that would require purchasing $7.6 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 37%, the appropriate cost of capital is 10%, and the equipment can be depreciated: a. Straight-line over a ten-year period, with the first deduction starting in one year. b. Straight-line over a five-year period, with the first deduction starting in one...
Daily Enterprises is purchasing a $10.57 million machine. It will cost $74,841.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.25 million per year along with incremental costs of $1.16 million per year. Daily's marginal tax rate is 38.00 %. The cost of capital for the firm is 11.00% # 17 unanswered not submitted (answer in...
Markov Manufacturing recently spent $17.2 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five years, and its marginal corporate tax rate is 35%. The company plans to use straight-line depreciation. a. What is the annual depreciation expense associated with this equipment? b. What is the annual depreciation tax shield? c. Rather than straight-line depreciation, suppose Markov will use the MACRS depreciation method for the...
Daily Enterprises is purchasing a $10.55 million machine. It will cost $74,201.00 to transport and install the machine. The machine has a depreciable life of five years using the straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $4.36 million per year along with incremental costs of $1.24 million per year. Daily's marginal tax rate is 35.00% The cost of capital for the firm is 10.00% (answer in dollars..so convert millions to dollars) What...
Markov Manufacturing recently spent $11.5 million to purchase some equipment used in the manufacture of disk drives. The firm expects that this equipment will have a useful life of five years, and its marginal corporate tax rate is 21%. The company plans to use straight-line depreciation. a. What is the annual depreciation expense associated with this equipment? b. What is the annual depreciation tax shield? c. Rather than straight-line depreciation, suppose Markov will use the MACRS depreciation method for the...
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $7,232,094.00 and will be sold for $1,769,684.00 at the end of the project (End of the 4th year). If the tax rate is 39.00%, what is the after-tax salvage value of the asset? # 4 unanswered not submitted Submit Answer format: Currency: Round to: 2 decimal places
A piece of newly purchased industrial equipment costs $946,376.00 and is classified as a seven-year property under MACRS. What is the book value of this piece of equipment at the end of year 3? unanswered Submit not_submitted Answer format: Currency: Round to: 2 decimal places.
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