The five-year macrs tax depreciation schedule

Assignment Help Finance Basics
Reference no: EM13292127

Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $520,000. Of this sum, $62,000 is described by the supplier as an installation cost. Ms. Potts does not know whether the Internal Revenue Service (IRS) will permit the company to treat this cost as a tax-deductible first-year deductible expense or as a capital investment. In the latter case, the company could depreciate the $62,000 using the five-year MACRS tax depreciation schedule.

Assume the tax rate is 35% and the opportunity cost of capital is 7%. Calculate the value of the tax shield 1 and tax shield 2. (Note: Use Tax shield 1 as an expense treatment and tax shield 2 as 5 year MACRS.) (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

Reference no: EM13292127

Questions Cloud

Calculate the following cash flow for the cutting machine a : However, to replace the old machine, Topsider has 2 options to choose from; Cutting Machine A and Cutting Machine B. Information about these 2 machines can be found below.
What is the angular speed of rotation : In an amusement park ride, cars are suspended from L = 4.20 m cables attached to rotating arms at a distance of D = 6.06 m from the axis of rotation. What is the angular speed of rotation
What is the average angular acceleration of the hard disk : During normal operation, a computer's hard disk spins at 7200 rpm. what is the average angular acceleration of the hard disk
Should investment in the new machine be accepted or rejected : Calculate the NPV from replacing the old machine. Should investment in the new machine be accepted or rejected? Why?
The five-year macrs tax depreciation schedule : Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $520,000. Of this sum, $62,000 is described by the supplier as an installation cost. Ms. Potts does not know whether the Internal Revenue Ser..
Explain how many grams of aluminum are needed to react : Based on the given chemical equation, how many grams of aluminum are needed to react with 0.6 moles of hydrochloric acid? Al + HCl yields AlCl3 + H2
Calculate the period of the spacecrafts orbit : A spacecraft is in orbit around a planet. The radius of the orbit is 2.9 times the radius of the planet (which is R = 71474 km). What is the period of the spacecraft's orbit
What amount of new common stock must be sold : What amount of new common stock must be sold if the existing capital structure is to be maintained?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd