6. A Texas corporation is considering the following two alternatives: Before Tax Cash Flow (thousands) Year Alternative...
4) A firm is considering the following investment project. Assume a 5-year property for MACRS Before-Tax Cash Flow Year (thousands) 0 - 100,000 +35,000 +35,000 +35,000 +35,000 5 +35,000 The income tax rate is 21%. If the firm requires a 10% after-tax rate of return, should the project be undertaken? MACRS depreciation will be used.
12-68 A corporation with $7 million in annual taxable income, paying 34% income tax, is considering two alternatives: Year 0 1-10 11-20 BTCF ($1,000) Alt 1 10,000 4,500 0 -20,000 4,500 4,500 Both alternatives will be depreciated using straight-line depreciation assuming a 10 year depreciable life and zero salvage value. Neither alternative is to be replaced at the end of its useful life. IF the corporation has a MARR of 10% after taxes, which alternative should it choose? Solve the...
Declining Balance Depreciation 12-18 A firm is considering the following investment project: Before-Tax Cash Flow (thousands) Year 12 -$1000 0 500 1 340 2 244 3 100 4 100 5 125 Salvage value The project has a 5-year useful life with a $125,000 salvage value, as shown. Double declining balance depreciation will be used, assuming the $125,000 salvage value. The combined income tax rate is 24%. If the firm requires a 10% after-tax rate of return, should the project be...
The cash flow for two alternatives is shown in the table below. a) Determine which alternative should be selected based on present worth comparison (use i=10%). b) If your analysis period (study period) is just 3 years, what should be the salvage value of alternative A2 at the end of year 3 to make the two alternatives economically indifferent? A1 Year 0 -900 -400 A2 -1800 -300 -300 1 2 -400 3 -400+200 -300 4 5 6 -300 -300 -300...
Please, show the formulas and
step by step on how to find the answer!!
Two mutually exclusive alternatives of A and B have both useful lives of 5 years. For Alternative A, there is an initial cost of $2,500 and annual benefits of $746. For Alternative B, there is an initial cost of $6,000 and annual benefits of $1,664. By following each of the following methods, define which alternative should be chosen? (30 pts) i. Annual Cash Flow Analysis (the...
1. The following cash flows are associated with three alternatives under consideration by the firm: N (Year) 0 2 3 4 5 A1 (TL) 0 4,500 4,500 4,500 4,500 4,500 A2 (TL) -50,000 20,000 20,000 20,000 20,000 20,000 A3 (TL) -75,000 20,000 25,000 30,000 35,000 40,000 If interest rate for the firm is 12%, compare the alternatives using the internal rate of return method (IRR method) and incremental cash flow approach. Which alternative should be selected? Why?
8 pts Question 11 Consider the following two mutually exclusive alternatives: $ 20,000 Uniform amul benefit Useful life in years Alternative B may be replaced with an identical item every 20 years at the same $28,000 cost and will have the same $2.750 uniform annual benefit. Ata 7% interest rate, use the annual cash flow analysis method to find which alternative should be selected. ཀྱིས 12pt Paragraph Consider the following two mutually exclusive alternatives: $ 20,000 2.000 $28.000 2.750 Uniform...
Need cash flow diagram
04) Three mutually exclusive alternative are being considered Initial Cost Benefit at the end of the first Year Uniform Annual Benefits at end of subsequent years Useful Life in years $500 $200 $100 $400 $200 $125 $300 $200 $100 At the end of its useful life, an alternative is not replaced. If MARR is 10%, which alternatives should be selected? a) Based on the payback period? b) Based on benefit-cost ratio analysis c) Benefit/Costs Analysis using...
Question 2 (1 point) A tabulation of incremental cash flow between two different-life alternatives must be prepared over the LCM of their lives. True False Question 3 (1 point) In evaluating mutually exclusive alternatives on the basis of rate of return, it is necessary to conduct an "Incremental ROR"in order to obtain the same ranking as the PW and AW methods True False Question 7 (1 point) When an incremental rate of return analysis is conducted correctly, the alternative identified...
After reading the Bartz Corporation article, you are left with
two alternatives (alternative A and alternative B), for tax
purposes what would be the better alternative for liquidating the S
Corp.? Please explain your answer. When determining the gain when
the stock is liquidated, what would be the "liquidation proceeds"
under each alternative? What would be the shareholders "stock
basis" under each alternative?
1 1 of 2 r tz formed Bartz Corporation in 1989 and elected S status immediately....