What is the after tax salvage cash flow for this new machine

Assignment Help Financial Management

Reference no: EM131061155

A company is considering a 5-year project to expand production with the purchase of a new automated machine using the latest technology. The new machine would cost $180,000 FOB St. Louis, with a shipping cost of $7,000 to the plant location. Installation expenses of $13,000 would also be required. This new machine would be classified as 7-year property for MACRS depreciation purposes. The project engineers anticipate that this equipment could be sold for salvage for $42,000 at the end of the project. If the corporate tax rate is 27%, what is the after tax salvage cash flow for this new machine at the end of the project? (Answer to the nearest dollar.)

MACRS percentages for depreciation each year are as follows:

Year %

1 14.29

2 24.49

3 17.49

4 12.49

5 8.93

6 8.93

7 8.93

8 4.45

Reference no: EM131061155

Questions Cloud

Determining the equity cost of capital : Summit Systems will pay a dividend of $1.56 one year from now. If you expect Summi's dividend to grow by 6.8% per year, what is its price per share if its equity cost of capital is 10.6%?

Calculate the gdp for both countries : BUS700 MACROECONOMICS: INDIVIDUAL ASSIGNMENT. Calculate the GDP for both countries. Discuss the usefulness of these data in deciding which, if any, of these two countries is likely to be experiencing an economic recession

What is the present worth of this investment : Galvanized Products is considering the purchase of a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow 1/4th of the purchase price from a ban..

Detailed analysis of a company : Need a final paper for Finance. Here is the prompt. Each student is required to conduct a detailed analysis of a company as part of a term paper. The analysis will look at issues like: Industry description; composition (domestic versus imports; lar..

What is the after tax salvage cash flow for this new machine : A company is considering a 5-year project to expand production with the purchase of a new automated machine using the latest technology. The new machine would cost $180,000 FOB St. Louis, with a shipping cost of $7,000 to the plant location. Installa..

Variable growth a fast-growing firm recently paid : VARIABLE GROWTH A fast-growing firm recently paid a dividend of $0.35 per share. The dividend is expected to increase at a 20 percent rate for the next three years. Afterwards, a more stable 12 percent growth rate can be assumed. If a 13 percent disc..

Consider the calculation of an external rate of return : Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash flow profile are moved forward to t = n using what value of i in the (F/P, i, n-t) factors? A) 0 B) the unknown value of ERR (i') C) MARR D) IRR

Determine the range of values of p for which equilibrium : Determine the range of values of P for which equilibrium of the block shown is maintained.

Why is the wacc used in capital budgeting : 1. Why is the WACC used in capital budgeting? 2. What are some of the factors that affect the cost of capital?

User Account

All Pages