User Account

All Pages

What tax savings will result

Assignment Help Finance Basics
Reference no: EM131130650

Pavlovich Instruments, Inc., a maker of precision telescopes, expects to report pre-tax income of $430,000 this year. The company's financial manager is considering the timing of a purchase of new computerized lens grinders. The grinders will have an installed cost of $80,000 and a cost recovery period of 5 years. They will be depreciated using the MACRS schedule.

a. if the firm purchases the grinders before year end, what depreciation expense will it be able to claim this year? 

b. if the firm reduces its reported income by the amount of the depreciation expense calculated in part a, what tax savings will result?

c. Assuming that Pavlovich does purchase the grinders this year and that they are its only depreciable asset, use the accounting definition given in Equation to find the firm's cash flow from operations for the year.

Equation

Cash flow from operations = Net profits after taxes + Depreciation and other noncashcharges

 

1623_d.jpg

Reference no: EM131130650

Questions Cloud

Record the redemption of the bonds assuming that interest : On January 1, 2012, when the carrying value of the bonds was $832,000, the company redeemed the bonds at 105. Record the redemption of the bonds assuming that interest for the period has already been paid.
System composed of two subsystems placed in series : (a) Let N(t) be the number of system failures in the interval [0,t]. In what case(s) will the stochastic process {N(t),t ≥ 0} be a renewal process if the random variables Sk do not all have an exponential distribution? Justify.
Annual expense ratio is netted out of the funds return : You purchased 5,400 shares in the New Pacific Growth Fund on January 2, 2010, at an offering price of $63.90 per share. The front-end load for this fund is 5 percent, and the back-end load for redemptions within one year is 2 percent. Assume that the..
Calculate the renewal function : Suppose that {N(t), t ≥ 0} is a renewal process for which the time τ between two consecutive renewals is a continuous random variable such that
What tax savings will result : If the firm purchases the grinders before year end, what depreciation expense will it be able to claim this year? if the firm reduces its reported income by the amount of the depreciation expense calculated in part a, what tax savings will result?
Explain what relevance this has for risk management : The liability of those who own a corporation is limited to their investment, while proprietors and general partners have unlimited liability for the obligations of their business. Explain what relevance this has for risk management.
Prepare the journal entry to record payment of interest : Prepare the journal entry to record payment of interest on June 1, 2011, assuming no accrual of interest from January 1, 2011, to June 1, 2011.
What are the appropriate allocation rates : St. Luke's hospital has three support departments and four patient services departments. Assume the hospital uses the direct method for cost allocation. Furthermore, the cost drive for general administration is patient services revenue, the cost driv..
Made up of two subsystems placed in parallel : We consider a system made up of two subsystems placed in parallel. The first subsystem is composed of two components (components nos. 1 and 2) placed in parallel, while the second subsystem comprises a single component (component no. 3). Let Sk de..

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd