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A subsidiary of General Electric (Voltare Energy) places in service electric generating and transmission equipment at a cost of $4,000,000. The equipment is expected to
A subsidiary of General Electric (Voltare Energy) places in service electric generating and transmission equipment at a cost of $4,000,000. 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 40% and the after-tax MARR is 9%. There is some concern that the need for this equipment will last only 10 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 10 years to see if the venture would be economically feasible. Answer the following questions (Questions 5 through 10) below: EOY BTCF, (S) DWO, (S) TI, (S) T,(S) ATCF, (5) MACRS(20) 0 1 2 Q#5 3 Q#6 4 5 Q#7 6 7 Q#8 8 Q#9 9 10 QW10 MARR 9% PWAT $875,773.31 $2,073,273.92 FWAT 10. What is the Taxable income for year 10 (T110)? A.-$968,950 B.-$833,310 C. $168,790 D. $472,340
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