Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A subsidiary of General Electric (Voltair Energy) places in service electric generating and transmission equipment at the cost of $2,000,000. The equipment is expected to

image text in transcribed
A subsidiary of General Electric (Voltair Energy) places in service electric generating and transmission equipment at the cost of $2,000,000. The equipment is expected to last for 30 years with a wreck-out salvage value of $250,000. The equipment will increase net income by $500,000 in the first year, increasing by 2.4% each year thereafter. The subsidiary's tax rate is 25%, and the after-tax MARR is 9%. There is some concern that the need for this equipment will last only ten years and need to be sold off for $550,000 at that time. Below is a table that you can use to fill in the calculations for BTCF, DWO, TI, T, ATCF, and MACRS (20-Year property class). The table is only for the first ten years to see if the venture would be economically feasible. EOY BTCF, (S) DWO, (S) TI, (S) T,$) ATCF, (S) MACRS(20) Q#10 Q#11 W Q#12 Q#13 Q#14 8 9 10 Q#15 MARR= PWA FWA IRRA 9% $1,086,538.36 $2,572,231.45 $2.572 234 18.86% What will be the depreciation writeoff for year 3 (DWO3)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

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

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

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

Get Started

Students also viewed these Accounting questions