What is the after-tax salvage value

Assignment Help Accounting Basics
Reference no: EM133034392

Problem - A company just spent $40,000 on a market study to analyze a new three-year expansion project. The project requires an initial fixed asset investment of $4.2 million to buy new machinery. The machinery will be depreciated straight-line to zero over its three-year tax life. The machinery will have a market value of $500,000 at the end of the third year when it will he sold. The project is estimated to generate $3 million in annual sales. With annual costs {excluding depreciation of $135 million. The project requires an initial investment in net working capital of $4001000. The marginal tax rate is 25 percent. What is the after-tax salvage value [ATSV] of the machinery in year 3? Will the ATS?

Reference no: EM133034392

Questions Cloud

Write avr assembly code to transmit precisely timed patterns : Morse Code Transmitter - Write AVR assembly code to transmit precisely timed patterns and Combine the timing and individual patterns to create Morse code
What is the company debt-equity ratio : The company's cost of equity is 12 percent and its pretax cost of debt is 7.8 percent. The tax rate is 22 percent. What is the company's debt-equity ratio
What will be the effect on the balance sheet : Assuming Winter uses the completed-contract method and billings in 2019 are $40,000,000 instead of $18,000,000, what will be the effect on the balance sheet
At what price would michael be indifferent : Rents from the property will be $24,000 and he expects them to increase at a rate of 5% per year annually. At what price would Michael be indifferent
What is the after-tax salvage value : The project requires an initial investment in net working capital of $4001000. The marginal tax rate is 25 percent. What is the after-tax salvage value
Compute the payback period : Managers estimate that this investment will have a 10-yeat life and generate net cash inflows of $310,000 the first year, Compute the payback period
Calculate the volume in cubic millimeters : Calculate the volume in cubic millimeters represented by each square and Calculate and record below the average cell count (per square)
Calculate his gross pensionable-taxable income : Doris MacNeil works for Modern Furniture in Alberta and receives on her pay bi-weekly salary $1,564.85, Calculate his Gross pensionable-taxable income
What is the maximum CCA deduction : The machine is a Class 8 asset. What is the maximum CCA deduction A1A can take on this asset for the April 1 to December? 31, 2020 fiscal? year

Reviews

Write a Review

Accounting Basics Questions & Answers

  Compute the budgeted cash receipts for november

Selling and administrative expenses are budgeted at $63,000 for November and are paid for in cash. Compute the budgeted cash receipts for November

  Determining initial investment of machine

The machine has a 5 year useful and has a salvage value of $3,000. The new machine will generate $8,000 in additional sales each year. Bob has a hurdle rate of 10%.

  State the total monthly budgeted cost formula

The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. State the total monthly budgeted cost

  I we covered inter-company accounting transactions as

in chapter four we covered inter-company accounting transactions as they pertain to merchandise plant assets notes and

  What taxpayers will benefit

What taxpayers will benefit? What taxpayers will not benefit? Explain impact of the increased standard deduction on number of taxpayers who itemize each year

  Explain the earning management strategy

Explain the earning management strategy that could been done by LTH. KUALA LUMPUR: Urusharta Jamaah Sdn Bhd (UJSB), a wholly-owned unit of Ministry of Finance.

  How much should be allocated to Iowa

Assume that these overhead costs are allocated based on direct labor costs. How much should be allocated to Iowa

  What are the general journal entries for this problem

The company made rent payment of $3000 on April 1, Prepaid rent on balance sheet of 2018 was $600. What are the general journal entries for this problem

  Dougco a domestic corporation owns 100 of thaico a thailand

dougco a domestic corporation owns 100 of thaico a thailand corporation. dougco manufactures top-of-the-line offi ce

  What problems might arise with such a plan

A company rewards it's production department employees for meeting budgeted cost levels by giving out bonusus. What problems might arise with such a plan?

  How much less can they expect to pay over the life of loan

How much less can they expect to pay over the life of the loan in interest payments by refinancing the loan at this time?

  Tina cruz and dale commons are discussing

Tina Cruz and Dale Commons are discussing how the market price of a bond is determined. Tina believes that the market price of a bond is solely a function of the amount of the principal payment at the end of the term of a bond.

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