Question
A company purchases a machine for $800,000. Before-tax cash flows (BTCF) are as described in the following table, in addition to a $200,000 salvage value
A company purchases a machine for $800,000. Before-tax cash flows (BTCF) are as described in the following table, in addition to a $200,000 salvage value after 5 years. Income tax rate is 40 percent.
b) Using declining balance (DB) depreciation method, determine DWO, TI, T, and ATCF, and fill values in the above table. Show your work explicitly to get full/partial credit.
c)Using double declining balance (DDB) deprecation method, determine DWO, TI, T, and ATCF, and fill values in the above table. Show your work explicitly to get full/partial credit.
d)Using MACRS-GDS depreciation while assuming that the equipment is qualified as 3-year property, determine DWO, TI, T, and ATCF, and fill values in the above table. Show your work explicitly to get full/partial credit.
(b) Using declining balance (DB) depreciation method, determine DWO, TI, T, and ATCF, and fill values in the above table. Show your work explicitly to get fullpartial credit. EOY BTCF TI ATCF DWO -$800,000 $100,000 $200,000 3 $300,000 $400,000 $500,000 +$200,000 (Salvage)Step by Step Solution
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