What is the value of the depreciation tax shield in year two

Assignment Help Financial Accounting
Reference no: EM132831202

Problem 1: Leisure Vacations is considering a project which will require the purchase of $1.4 million in new 5-Year MACRS equipment. The MACRS rates are 20 percent, 32 percent, 19.2 percent, 11.52 percent, 11.52 percent, and 5.76 percent for Years 1 to 6, respectively. Ignore bonus depreciation. The firm desires a minimal 14 percent rate of return and has a combined tax rate of 25 percent. What is the value of the depreciation tax shield in Year 2 of the project?

Multiple Choice

Option 1:
$89,600

Option 2:
$123,416

Option 3: $112,000

Option 4:
$107,500

Option 5:
$90,400

Reference no: EM132831202

Questions Cloud

Record the september transactions : Record the September transactions. On September 1, the beginning of its fiscal year, Campus Office Supply Ltd. had an inventory
Explain the connection between language and literacy : Explain the connection between language and literacy. How does language development affect literacy? Include a resource that supports your explanation.
Explain interface monitoring metrics : Explain interface monitoring metrics and why they are important - use examples to illustrate your position
Single windows server : Imagine you work for an organization with a single Windows Server 2016 Active Directory domain
What is the value of the depreciation tax shield in year two : What is the value of the depreciation tax shield in Year 2 of the project? Leisure Vacations is considering a project which will require the purchase
Was anything unclear or confusing to you : As a leader, managing the staff in continuous improvement means having an awareness of the best way to motivate each member of the staff to become the best.
Analyze a grievance policy from an institution : Research and analyze a grievance policy from an institution of your choice. In an initial post, compare and contrast the grade and non-grade components.
What are four types of out-of-court settlements : What are four types of out-of-court settlements? Briefly describe each. What is the difference between an internal reorganization and an external reorganization
How consideration of factors may assist a coach or mentor : Create an 8- to 10-slide multimedia presentation to be used in training new coaches on considerations of gender, cultural, and generational differences.

Reviews

Write a Review

Financial Accounting Questions & Answers

  What is the most would be willing to pay for alfa growth

If your required return on this stock is 13.31 percent, what is the most you would be willing to pay for Alfa Growth, Inc. common stock now?

  How do compute the book value of the equipment

How do Compute the book value of the equipment at the end of each of the four years. (If an answer is zero, please enter 0. Do not leave any fields blank.)

  What the respective shares of april and may will be

What the respective shares of April and May will be? April and May are partners sharing profits equally and with capital balances of P750,000 and P500,000.

  Should rita continue the practice started by jamie

Should Rita continue the practice started by Jamie? The company is a specialty chain hotel with nine hotels concentrated in one metropolitan area.

  Freed capacity to launch a new product

Suppose that if the thermostats were purchased, Climate-Control, Inc., could use the freed capacity to launch a new product. The segment margin of the new product would be $65,000 per year. Should Climate-Control, Inc., accept the offer to buy the..

  Make the cash flows from the operating activities

Lulu Zola Company reported net income of $200,000.00 for the current year. Make the cash flows from the operating activities

  Calculate the balance sheet for the end of the year

You are provided with the following information about the heartland hotel corporation. Calculate the balance sheet for the end of the year for this hotel

  Make the basic earnings per share of fitzgerald ltd

Make the basic earnings per share of Fitzgerald Ltd for the year ending 30 June 2020. During the year ended 30 June 2020, the company made net profit

  Is the par value of five and below common stock

The par value of Five and Below's common stock is $1. If the offering price is $15, Five and Below will credit common stock for $1.True False

  How would the bond be disclosed on a balance sheet dated

On January 1, 2016 Nezcorp issues a 1-year 10% $100,000,000 bond in a 7% market. How would the bond be disclosed on a balance sheet dated January 1, 2016? What if the bond was issued on February 1 rather than on January 1?

  Find and demonstrate what is present value of annuity

Assume a 6.7% p.a. interest rate,Determine what is the present value of the annuity if the first cash flows occurs 4 years from today.

  Calculate the return on assets for each year

Calculate the return on assets (ROA) for each year. How has the ROA trend changed over the last three years? How does your bank compare to the regional banks

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