Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1 pts Time Jake the Dog Inc. is investing in a new portable Iguana kwing machine that will cost $110.000. The machine has a useful

image text in transcribed
1 pts Time Jake the Dog Inc. is investing in a new portable Iguana kwing machine that will cost $110.000. The machine has a useful life of 6 years and falls into the 5-year property is for the depreciation purposes. The IRS MACRS schedule for the six years is: (1) 20%(2) 32%,(3) 19 2%, 1411.526,15 11.52%. (6) 5.76%. It will generate $50,000 per year of savings for Jake and can be sold for 350.000 at the end of the 6-year period. Jake's corporate tax rate is 32% In addition, Jake has 2000 outstanding 9% annual coupon bonds with a $1000 par value, 20 years to maturity and a price of $1085. Jake also has 70,000 shares of common stock outstanding that is selling for $45 per share. This stock has a beta of 2.75 (its Jake! he is a risky dog.dude the expected market return is 12% and the risk-free rate is 5%. Finally, Jake has 36,000 shares preferred stock outstanding that pays a 3.5% dividend and sells for $40 per share. What are the depreciation expenses for the machine for years 1 through 6 (do not include taxes here)? O $31,332, 30,776, 18,928, 18.964, 11,520, 11.520 O $34,330, 54,440, 33,820, 15.450, 15.450, 78,436 O $62,000, 99,200, 59,520,35.712, 35.712. 17.856 O $33,333, 33,333, 33,333, 33.333,33,333, 33,333 O $42.000, 67,200, 40,320, 24,192, 24.192, 12.096

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of managerial finance

Authors: Lawrence J Gitman, Chad J Zutter

12th edition

9780321524133, 132479540, 321524136, 978-0132479547

More Books

Students also viewed these Finance questions