Homework Answers
| The ATCF for each year and the PVs of the cash flows are calculated in the table below: | ||||||||
| Year | BTCF | Depreciation Rate [%] | Depreciation | Taxable Income | Tax at 24% | ATCF | PVIF at 18% | PV at 18% |
| 0 | $ (200,000) | $ (200,000) | 1.00000 | $ (200,000) | ||||
| 1 | $ 44,000 | 20.00 | $ 40,000 | $ 4,000 | $ 960 | $ 43,040 | 0.84746 | $ 36,475 |
| 2 | $ 44,000 | 32.00 | $ 64,000 | $ (20,000) | $ (4,800) | $ 48,800 | 0.71818 | $ 35,047 |
| 3 | $ 44,000 | 19.20 | $ 38,400 | $ 5,600 | $ 1,344 | $ 42,656 | 0.60863 | $ 25,962 |
| 4 | $ 44,000 | 11.52 | $ 23,040 | $ 20,960 | $ 5,030 | $ 38,970 | 0.51579 | $ 20,100 |
| 5 | $ 44,000 | 11.52 | $ 23,040 | $ 20,960 | $ 5,030 | $ 38,970 | 0.43711 | $ 17,034 |
| 6 | $ 44,000 | 5.76 | $ 11,520 | $ 32,480 | $ 7,795 | $ 36,205 | 0.37043 | $ 13,411 |
| 7 | $ 44,000 | 0.00 | $ - | $ 44,000 | $ 10,560 | $ 33,440 | 0.31393 | $ 10,498 |
| 8 | $ 44,000 | 0.00 | $ - | $ 44,000 | $ 10,560 | $ 33,440 | 0.26604 | $ 8,896 |
| 9 | $ 44,000 | 0.00 | $ - | $ 44,000 | $ 10,560 | $ 33,440 | 0.22546 | $ 7,539 |
| 10 | $ 44,000 | 0.00 | $ - | $ 44,000 | $ 10,560 | $ 33,440 | 0.19106 | $ 6,389 |
| $ (18,648) | ||||||||
| Answer: After tax present worth of the special power tool = | $ (18,648) |
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2. A special power tool (costs $200,000) with a 5-year MACRS life and no salvage is...
5.(20 pts) A special power tool for plastic products is classified $6,500, has a salvage value...
5.(20 pts) A special power tool for plastic products is classified $6,500, has a salvage value of $800 when sold at the end of 5 years, uniform annual end-of-ycar benefits (before tax) of $3,500 per year, and uniform annual operating and maintenance costs (before tax) of $1,200 per year. Compute the after-tax present worth (for an MARR of 10% ) , based on MACRS depreciation and a 34% corporate income tax rate. (MACRS percentages for a three-year property are 33.33%,...
5.(20 pts) A special power tool for plastic products is classified $6,500, has a salvage value...
5.(20 pts) A special power tool for plastic products is classified $6,500, has a salvage value of $800 when sold at the end of 5 years, uniform annual end-of-ycar benefits (before tax) of $3,500 per year, and uniform annual operating and maintenance costs (before tax) of $1,200 per year. Compute the after-tax present worth (for an MARR of 10% ) , based on MACRS depreciation and a 34% corporate income tax rate. (MACRS percentages for a three-year property are 33.33%,...
No excel. 14. (4 pts) A special power tool for plastic products costs $400, has a...
No excel.
14. (4 pts) A special power tool for plastic products costs $400, has a four-year useful life, no salvage value, and uniform annual end-of-year benefits (before tax) of $200 per year. Compute the after-tax present worth (for an MARR of 10%), based on MACRS depreciation and a 21% corporate income tax rate. (MACRS percentages for a three-year property are 33.33%, 44.45%, 14.81%, and 7.41%, for years 1, 2, 3, and 4, respectively.)
"You purchased an airplane for $494,000 and will depreciate it using a 7-year MACRS with a...
"You purchased an airplane for $494,000 and will depreciate it using a 7-year MACRS with a 5-year life. Salvage value in year 5 is expected to be $188,000. The airplane is expected to increase revenues by $193,000 per year. However, O&M costs are expected to be $29,000 per year. Your company is in the 21% tax bracket and your MARR is 20%. What is the Net Present Worth of this investment?"
Compute by hand (without EXEL!) 10.9 An asset in the five-year MACRS property class costs $150,000...
Compute by hand (without EXEL!)
10.9 An asset in the five-year MACRS property class costs $150,000 and has a zero estimated salvage value after six years of use. The asset will generate annual revenues of $320,000 and will require $80,000 in annual labor and $50,000 in annual material expenses. There are no other revenues and expenses. Assume a tax rate of 40%. a. Compute the after-tax cash flows over the project life. b. Compute the NPW at MARR = 12%....
An asset with a 5‐year MACRS* life will be purchased for $10,500. It will produce net annual benefits (i.e., revenues) o...
An asset with a 5‐year MACRS* life will be purchased for $10,500. It will produce net annual benefits (i.e., revenues) of $2000/year for 6 years, after which time it will have a net salvage value of zero and will be retired. The company’s total tax rate is 34% and they use an ieff (MARR) of 11%. Use these to construct a table in Excel showing the annual discounted after tax cash flows (CF). Please calculate discrete and cumulative CF for...
A firm can purchase a centrifugal separator (5-year MACRS property) for $21,000. The estimated salvage value...
A firm can
purchase a centrifugal separator (5-year
MACRS property) for
$21,000.
The estimated
salvage value is
$2,500
after a useful
life of six years. Operating and maintenance
(O&M)
costs for the first year are expected to be
$2,100.
These
O&M
costs are projected to increase by
$500
per year each
year thereafter. The income tax rate is
25%
and the MARR
is
11%
after taxes.
What must the uniform annual benefits be for the purchase of the
centrifugal separator...
3. A machine is purchased for S70,000. Life is 10 years with a S 10,000 salvage. MARR is 10%, and...
please show work that is easy to UNDERSTAND
3. A machine is purchased for S70,000. Life is 10 years with a S 10,000 salvage. MARR is 10%, and the tax rate is 50%. Cash operating costs are $4500 per year. Five year MACRS (20, 32, 19.2. 11.52, 11.52,5.76) depreciation will be used. Calculate the annual equivalent revenue requirements for this machine.
3. A machine is purchased for S70,000. Life is 10 years with a S 10,000 salvage. MARR is 10%,...
2. A tool costing $ 30000 has no salvage value. Its cash flow before tax is...
2. A tool costing $ 30000 has no salvage value. Its cash flow before tax is shown below. Year BTCF SOYD Depreciation Taxable income Taxes ATCF - 30000 +10000 +15000 +20000 The tool must be depreciated over 3 years according to SOYD method. The tax rate is 35% a) Fill in the remaining four columns in the Table. b) What is the after tax rate of return?
Your firm needs a computerized machine tool lathe which costs $53,248 and requires $11,108 in maintenance...
Your firm needs a computerized machine tool lathe which costs $53,248 and requires $11,108 in maintenance expense for each year of its 5-year life. After five years, this machine will be replaced. The machine falls into the MACRS (Links to an external site.) 5-year class life category. Assume a tax rate of 25 percent and a discount rate of 12 percent. If the lathe can be sold for $16,668 at the end of year 5, what is the after-tax salvage...
5.(20 pts) A special power tool for plastic products is classified $6,500, has a salvage value of $800 when sold at the end of 5 years, uniform annual end-of-ycar benefits (before tax) of $3,500 per year, and uniform annual operating and maintenance costs (before tax) of $1,200 per year. Compute the after-tax present worth (for an MARR of 10% ) , based on MACRS depreciation and a 34% corporate income tax rate. (MACRS percentages for a three-year property are 33.33%,...
5.(20 pts) A special power tool for plastic products is classified $6,500, has a salvage value of $800 when sold at the end of 5 years, uniform annual end-of-ycar benefits (before tax) of $3,500 per year, and uniform annual operating and maintenance costs (before tax) of $1,200 per year. Compute the after-tax present worth (for an MARR of 10% ) , based on MACRS depreciation and a 34% corporate income tax rate. (MACRS percentages for a three-year property are 33.33%,...
No excel.
14. (4 pts) A special power tool for plastic products costs $400, has a four-year useful life, no salvage value, and uniform annual end-of-year benefits (before tax) of $200 per year. Compute the after-tax present worth (for an MARR of 10%), based on MACRS depreciation and a 21% corporate income tax rate. (MACRS percentages for a three-year property are 33.33%, 44.45%, 14.81%, and 7.41%, for years 1, 2, 3, and 4, respectively.)
Compute by hand (without EXEL!)
10.9 An asset in the five-year MACRS property class costs $150,000 and has a zero estimated salvage value after six years of use. The asset will generate annual revenues of $320,000 and will require $80,000 in annual labor and $50,000 in annual material expenses. There are no other revenues and expenses. Assume a tax rate of 40%. a. Compute the after-tax cash flows over the project life. b. Compute the NPW at MARR = 12%....
A firm can
purchase a centrifugal separator (5-year
MACRS property) for
$21,000.
The estimated
salvage value is
$2,500
after a useful
life of six years. Operating and maintenance
(O&M)
costs for the first year are expected to be
$2,100.
These
O&M
costs are projected to increase by
$500
per year each
year thereafter. The income tax rate is
25%
and the MARR
is
11%
after taxes.
What must the uniform annual benefits be for the purchase of the
centrifugal separator...
please show work that is easy to UNDERSTAND
3. A machine is purchased for S70,000. Life is 10 years with a S 10,000 salvage. MARR is 10%, and the tax rate is 50%. Cash operating costs are $4500 per year. Five year MACRS (20, 32, 19.2. 11.52, 11.52,5.76) depreciation will be used. Calculate the annual equivalent revenue requirements for this machine.
3. A machine is purchased for S70,000. Life is 10 years with a S 10,000 salvage. MARR is 10%,...
2. A tool costing $ 30000 has no salvage value. Its cash flow before tax is shown below. Year BTCF SOYD Depreciation Taxable income Taxes ATCF - 30000 +10000 +15000 +20000 The tool must be depreciated over 3 years according to SOYD method. The tax rate is 35% a) Fill in the remaining four columns in the Table. b) What is the after tax rate of return?
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