Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Taxes are a cost, and, therefore, changes in tax rates can affect consumer prices, project lives, and the value of existing firms. The following problem illustrates this. It also illustrates that tax changes that appear to be "good for business" do not always increase the value of existing firms. Indeed, unless new investment incentives increase consumer demand, they can work only by rendering existing equipment obsolete.
The manufacture of bucolic acid is a competitive business. Demand is steadily expanding, and new plants are constantly being opened. Expected cash flows from an investment in a new plant are as follows:
0
1
2
3
1. Initial investment
100
2. Revenues
3. Cash operating costs
50
4. Tax depreciation
33.33
5. Income pretax
16.67
6. Tax at 40%
6.67
7. Net income
10
8. After-tax salvage
15
9. Cash flow (7 + 8 + 4 - 1)
-100
+43.33
+58.33
NPV at 20% =00
a. What is the value of a one-year-old plant? Of a two-year-old plant?
b. Suppose that the government now changes tax depreciation to allow a 100 percent write off in year 1. How does this affect the value of existing one- and two-year-old plants? Existing plants must continue using the original tax depreciation schedule.
a buyer with a yearly gross income of 45000 is considering a property with annual taxes of 1450. what is the maximum
Consider the following probability distribution of returns estimated for a proposed project that involves a new ultrasound machine.
Van Roekel Corporation sells a single product. The product has a selling price of $100 each unit and variable expenses of 80 percent of sales. If the company's fixed expenses total $150,000 each year,
Suppose the Japanese yen spot exchange rate is 118 yen = $1.00, and the British pound spot exchange rate is 1 pound = $1.81.
Examine the structure and activities in Wal-Mart and identify two projects or events which required an investment. One should be the 'current project' and other long-term investment project.
your bank has offered you a 15000 loan. the terms of the loan require you to pay back the loan in five equal annual
given the following annual net cash flows determine the internal rate of return to the nearest whole percent of a
Compare the returns on equity for the companies. Which company is best in a strong economy? In an average economy? In a weak economy?
Saunders Corp. has a book net worth of $13,655. Long-term debt is $9,100. Net working capital, other than cash, is $3,720. Fixed assets are $18,280 and current liabilities are $1,990.
For the year ended March 31, 2011, the company had revenues of $953,757, general and administrative expenses of $313,753, depreciation expenses of $131,455, leasing expenses of $108,195, and interest expenses equal to $78,122. If the company's tax..
Shelley wants to cash in her winning lottery ticket. She can either receive 10, $100,000 semiannual payments starting today-What is the equivalent lump-sum payment?
Is it a good idea to open American fast food restaurants in Disney parks overseas selling the same kind of food sold in U.S. parks? Why or why not?
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd