Uses straight line depreciation of the purchase price

Assignment Help Financial Management

Reference no: EM13885278

1. The Los Angeles Lakers are sold for 650 Million. At a tax rate of 25% what is the new owner's yearly tax savings if he uses straight line depreciation of the purchase price over the full 15 years allowed by the IRS?

2. Assume the new owner of the Lakers decides to depreciate the full purchase price over 5 years using a double declining balance schedule. At a tax rate of 25% the total tax savings over the 5 years would be ______ and he/she would save __________ in the 5th year (round to the nearest $500,000)

Reference no: EM13885278

Questions Cloud

Thinking of buying a craft emporium : You are thinking of buying a craft emporium, it is expected to generate cash flows of 30,000 per year in years 1 through 5, and $40,000 per year in 6 through 10. if the appropriate discount rate is 8 % , what amount are you willing to pay for the emp..

Free cash flow growth rate-current intrinsic stock price : This year, Huxley Building Supplies' free cash flow is $1.75 million. Its free cash flow growth rate is expected to be constant at 25% for 2 years, after which free cash flows are expected to grow at a rate of 6% forever. What is the best estimate of..

What is the best estimate of current intrinsic stock price : This year, Huxley Building Supplies' free cash flow is $1.75 million. Its free cash flow growth rate is expected to be constant at 25% for 2 years, after which free cash flows are expected to grow at a rate of 6% forever. Its weighted average cost of..

What is the monthly loan payment : You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized over 5 years (60 months), and the nominal interest rate would be 12%, with interest paid monthly. What is the monthly loan payment? What is the loan’s EF..

Uses straight line depreciation of the purchase price : he Los Angeles Lakers are sold for 650 Million. At a tax rate of 25% what is the new owner's yearly tax savings if he uses straight line depreciation of the purchase price over the full 15 years allowed by the IRS?

What is best estimate of the stocks current intrinsic price : Decker Tires’ free cash flow for the current year equals $1.32 million. Analysts expect the company's free cash flow to grow by 30% next year, by 10% in the year after that, and at a constant rate of 5% thereafter. The WACC for this company 9.00%. De..

About the bid price : Dahlia Enterprises needs someone to supply it with 130,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. You also need an initial investment in net working c..

Use as the annual sales figure when evaluating this project : Winnebagel Corp. currently sells 25,000 motor homes per year at $63,000 each, and 9,500 luxury motor coaches per year at $100,000 each. The company wants to introduce a new portable camper to fill out its product line; What is the amount to use as th..

How much is the max exclusion from taxation on the gain : Jane has lived in her home 6 years got married last month gave her husband one half interest in home. if they sell the home next month how much is the max exclusion from taxation on the gain.

User Account

All Pages