Calculate the tax analysis

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Calculate the Tax Analysis of the following situation. A company buys a Tugboat (Tug) for 1, 700,000. It will generate a before tax revenue of 1, 200,000 per year with yearly maintenance expenses of 200,000. The company plans to keep the boat for at least 20 years. With an effective tax rate of 40% and using MACRS - GDS depreciation show yearly before tax net revenue, depreciation, taxable income, taxes paid and after tax cash flow. Calculate this for 10 years. In addition, using I = 6% calculate the Present Worth of this system after taxes using the first five years only. (It may take longer than 5 years for the system to pay for itself, so the answer might be negative.)

Reference no: EM131560178

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