Angiletta corporation-pv of future cash flows

Reference no: EM1330876

Angiletta Corporation is considering a new project requiring a $30,000 investment in test equipment with no salvage value. The project would produce $12,000 of pretax income before depreciation at the end of each of the next six years. The company's income tax rate is 40%. In compiling its tax return and computing its income tax payments, the company can choose between the two alternative depreciation schedules shown in the table.

Straight-Line
Depreciation MACRS
Depreciation
Year 1 $ 3,000 $ 6,000
Year 2 6,000 9,600
Year 3 6,000 5,760
Year 4 6,000 3,456
Year 5 6,000 3,456
Year 6 3,000 1,728

Totals $ 30,000 $ 30,000

1. Compute the net present value of the investment if straight-line depreciation is used. Use 10% as the discount rate. (Round "PV Factor" to 4 decimal places. Round your intermediate calculations and final answer to the nearest dollar amount. Omit the "tiny_mce_markerquot; sign in your response.)

2. Compute the net present value of the investment if MACRS depreciation is used. Use 10% as the discount rate. (Round "PV Factor" to 4 decimal places. Round your intermediate calculations and final answer to the nearest dollar amount. Omit the "tiny_mce_markerquot; sign in your response.)

Reference no: EM1330876

Questions Cloud

As with this data how could you make the cost benefit test : As with this data how could you make the cost benefit test to tell if at a given percentage level abatement is effiecient.

Issues facing businesses today : Explain What are some of the key issues facing businesses today in terms of continuing to offer a competitive benefits package?

Scope of practice issues while designing job descriptions : Why is it important for organizations and health care administrators to be aware of scope of practice issues.

The meaning of research is organized curiosity : Find the meaning of research is organized curiosity.

Angiletta corporation-pv of future cash flows : Angiletta Corporation is considering the new project requiring $30,000 investment in test equipment with no salvage value. Calculate the net present value of investment if straight-line depreciation is used. Use 10% as the discount rate.

Do comparision with the economics of the two service product : Do comparision with the economics of the two following service producing alternatives.

Make the syntax for a 2d array which has four rows : Write down the syntax for a 2D array which has four rows. The first row will have 10 elements and the second row will have 5 elements. The third row will have 8 elements and the fourth row will have 12 elements.

Check and assess the key hrm issues at unicall : Check and assess the key HRM issues at UniCall and Recommend and justify HRM interventions that would improve business performance

Discuss the costs : Discuss the many costs that businesses face today.

User Account

All Pages