What is the aftertax increment to the cash flow

Assignment Help Financial Management

Reference no: EM131318857

Part A: Morris Motors just purchased some 5-year property at a cost of $216,000 and the property will be depreciated based on MACRS.

1) Which one of the following will correctly give you the book value of this equipment at the end of year 2?

Year 1: 20%

Year 2: 32%

Year 3: 19.2%

Year 4: 11.52%

Year 5: 11.52%

Year 6: 5.76%

Part B: As asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,500,000 and will be sold for $1,600,000 at the end of the project. If the tax rate is 35%

2) What is the aftertax increment to the cash flow from the sale of the asset?

Reference no: EM131318857

Questions Cloud

What is future value of the cash flows : Scottie Barnes has invested in an investment that will pay him $5,400, $5,450, $7,225, and $7,500 over the next four years. If his opportunity cost is 10 percent, what is the future value of the cash flows he will receive? (Round to the nearest dolla..

Change in stock price-Change in stock percent : Scottie Barnes has invested in an investment that will pay him $5,400, $5,450, $7,225, and $7,500 over the next four years. If his opportunity cost is 10 percent, what is the future value of the cash flows he will receive? How much should the stock p..

What would the price be if the P-E ratio increased : New York Times Co. (NYT) recently earned a profit of $2.71 per share and has a P/E ratio of 19.95. The dividend has been growing at a 7.25 percent rate over the past six years. If this growth rate continues, what would be the stock price in four year..

What is the future value of the cash flows he will receive : Scottie Barnes has invested in an investment that will pay him $5,400, $5,450, $7,225, and $7,500 over the next four years. If his opportunity cost is 10 percent, what is the future value of the cash flows he will receive?

What is the aftertax increment to the cash flow : Morris Motors just purchased some 5-year property at a cost of $216,000 and the property will be depreciated based on MACRS. Which one of the following will correctly give you the book value of this equipment at the end of year 2? What is the afterta..

What is the value of this stock at the beginning : Waller Co. (WAG) paid a $0.157 dividend per share in 2006, which grew to $0.346 in 2012. This growth is expected to continue. What is the value of this stock at the beginning of 2013 when the required return is 15.7 percent?

What would the price be if the p-e ratio increased : New York Times Co. (NYT) recently earned a profit of $2.71 per share and has a P/E ratio of 19.95. The dividend has been growing at a 7.25 percent rate over the past six years. If this growth rate continues, what would be the stock price in four year..

What is the future value of the cash flows : Scottie Barnes has invested in an investment that will pay him $5,400, $5,450, $7,225, and $7,500 over the next four years. If his opportunity cost is 10 percent, what is the future value of the cash flows he will receive? (Round to the nearest dolla..

Arguably most risky means of maintaining liquidity : Which of the following is the most efficient yet arguably most risky means of maintaining liquidity? .....and please explain why.

User Account

All Pages