What is the expected after-tax cash flow from selling a piece of equipment if TwoPlus purchases the equipment today for $143,000.00, the tax rate is 23.00percent, the equipment is sold in 2 years for $36,500.00, and MACRS depreciation is used where the depreciation rates in years 1, 2, 3, 4, and 5 are 20%, 32%,19%, 12%, and 10%, respectively?O $17,102.80 (plus or minus $10)$37,643.10 (plus or minus $10)$50,470.20 (plus or minus $10)$43,892.20 (plus or minus $10)None of the above is within $10 of the correct answer

The after-tax cash flow from selling a piece of equipment can be calculated by first determining the…

Answered: What is the expected after-tax cash…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 2P

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The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?
What is the expected after - tax cash flow from selling a piece of equipment if Probst purchases the equipment today for $548, 860.00, the tax rate is 39.9 percent, the equipment will be sold in 3 years for $98, 800.00, and the equipment will be depreciated to $72, 600.00 over 12 years using straight - line depreciation? $106, 885.74 (plus or minus $10) $262, 538.29 (plus or minus $10) - $72, 688.20 (plus or minus $10) $230,867.00 (plus or minus $10) None of the above is within $10 of the correct answer
In year 0 you purchase an asset for $500,000 and in year 1 you receive a positive cash flow of $100,000 from operating the asset. Following a MACRS 7-year depreciation schedule (year 1 recovery rate of 14.29 percent) and assuming you are in a 39% tax bracket, what is your year 1 after tax cash flow (ATCF) to the nearest $50 ? O a) $88,750 O b) $28,550 c) $400,000 O d) $380,750 O e) $11,250
Southern inc. purchases an asset for 98,000. Thus asset qualifies as a 3 year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1= 33.33% year 2: 44.45% year 3= 14.81% and year 4 = 7.41%. Southern has a tax date of 25%. If the asset is sold at the end of 2 years for 29,000 what is the cash flow disposal ? 17,404 11,129 13,923 21,755 27,194
Consider an asset that costs $1,280,170 and is depreciated straight-line to 83,206 over its 14-year tax life. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for $128,169. If the relevant tax rate is 0.21, what is the aftertax cash flow from the sale of this asset (SVNOT)?
An asset purchased today at a cost of $50,000 is depreciated straight-line down to value 0 over a period of 5 years, for tax purposes. Suppose the asset is sold at a price of $30,000 at the end of 2 years. What is the after-tax cash inflow from salvage (selling the asset), assuming a tax rate of 40%? a) $30,000 b) $26,000 c) $38,000 d) $20,000 e) None of the above
Consider an asset that costs $1,075, 196 and is depreciated straight-line to zero over its 15-year tax life. The asset is to be used in a 5-year project; at the end of the project, the asset can be sold for $109, 800. If the relevant tax rate is 0.39, what is the aftertax cash flow from the sale of this asset (SVNOT)?
-Suppose a 5-year piece of equipment purchased for 500,000 is sold at the end of year 4 after taking four years of straight- line depreciation. Assume that the equipment is sold for 200,000 and the tax rate is 35%. What is the book value? Is there tax savings on the sale? Is there tax effect?
Consider an asset that costs $528,000 and is depreciated straight-line to zero over its 6-year tax life. The asset is to be used in a 3-year project; at the end of the project, the asset can be sold for $66,000. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset? $115,038.00 $104,082.00 $109,560.00 $51,480.00 $429,012.00
You buy a property for $100,000 in year 0. The building is depreciated using straight-line depreciation over 27.5 year. The NOI is $5,000 in year 1 and grows at 2% thereafter. The building is sold at a the end of year 4 at a terminal cap rate of 6%. Assume an ordinary income tax rate of 35%, a capital gains tax rate of 20%, and a depreciation recapture tax rate of 25%. What is going to be the total tax bill on the sale? O 1,187 O 1,959 O 3,146 O 3,636
The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $299,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $181,000 and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. a. What is the book value of the equipment? The book value of the equipment after the third year is $ (Round to the nearest dollar.)
2. The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for $302,000. a. What is the book value of the equipment? b. If Jones sells the equipment today for $184,000and its tax rate is 21%, what is the after-tax cash flow from selling it? Note: Assume that the equipment is put into use in year 1. a. What is the book value of the equipment? The book value of the equipment after the third year is $____ (Round to the nearest dollar.) b. If Jones sells the equipment today for $184,000 and its tax rate is 21%, What is the after-tax cash flow from selling it? The total after-tax proceeds from the sale will be $____ (Round to the nearest dollar.)

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