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home / study / business / accounting /accounting questions and answers / question 7 (4 points) a company purchased manufacturing equipment for... Question: Question 7 (4 points) A company purchased manufacturing equ... Question 7 (4 points) A company purchased manufacturing equipment for $750,000. For its financial statements the company uses the declining-balance method at a rate of 30 percent per year for depreciating this type of equipment which has a useful period of 10 years as per the manufacturing standard. All equipment is assumed to have a salvage value of zero. Given that the company is subject to a corporate income tax rate of 40 1 percent, determine the future tax credits resulting from subsequent depreciation allowances after the ten year period following the purchase of these manufacturing equipment. Enter your answer with units of $, rounded to the nearest dollar. Hint! This is not a Canadian corporation, and no CCA rate is listed. Therefore, the half-year rule does not apply. Show transcribed image text Expert Answer Anonymous answered this 160 answers Was this answer helpful? 0 Alt reliltion Calculation of future tave goredelo year Alepriciation Tare Credil@yo L 750000X30-17 22 SDOO qoooo 63000 2 525000 X30.1- 157500 3 367500 X30.1. 110250 YU100 30870 Question: 11. Champlain Transportation Inc. is considering a five-year proj... 11. Champlain Transportation Inc. is considering a five-year project that requires an initial capital investment of $1 million. The project is expected to generate operating revenue of $500,000 per year, and the associated operating expenses are estimated at $250,000 per year. The capital asset belongs to asset class 9, which has a CCA rate of 30 percent. The firm's tax rate is 35 percent. What is the after-tax cash flow for year 1? a. $110,000 b. $215,000 C. $302,500 d. $312,500 Expert Answer Vipul Vashisht answered this 7,965 answers Was this answer helpful? 11. Champlain Transportation Inc. is considering a five-year project that requires an initial capital investment of $1 million. The project is expected to generate operating revenue of $500,000 per year, and the associated operating expenses are estimated at $250,000 per year. The capital asset belongs to asset class 9, which has a CCA rate of 30 percent. The firm's tax rate is 35 percent. What is the after-tax cash flow for year 1? a. $110,000 b. $215,000 C. $302,500 d. $312,500 Initial Investment = $ 1,000,000 Revenue = $ 500,000 Operating Exp. = $ 250,000 Capital Asset belongs to asset class 9, which has a CCA rate = 30% Beginning UCC = $ 1000,000*50% = $ 500,000 CCA depreciation = $500,000*30% = $150,000 Calculating the after tax cash flow for year 1:- Particular Amount in $ Revenue 500,000 Less: Operating Exp (250,000) Less: CCA dep. (150,000) Earnings before Tax 100,000 Less: Tax @ 35% (35,000) Net Income 65,000 home / study / business / accounting /accounting questions and answers / question 7 (4 points) a company purchased manufacturing equipment for... Question: Question 7 (4 points) A company purchased manufacturing equ... Question 7 (4 points) A company purchased manufacturing equipment for $750,000. For its financial statements the company uses the declining-balance method at a rate of 30 percent per year for depreciating this type of equipment which has a useful period of 10 years as per the manufacturing standard. All equipment is assumed to have a salvage value of zero. Given that the company is subject to a corporate income tax rate of 40 1 percent, determine the future tax credits resulting from subsequent depreciation allowances after the ten year period following the purchase of these manufacturing equipment. Enter your answer with units of $, rounded to the nearest dollar. Hint! This is not a Canadian corporation, and no CCA rate is listed. Therefore, the half-year rule does not apply. Show transcribed image text Expert Answer Anonymous answered this 160 answers Was this answer helpful? 0 Alt reliltion Calculation of future tave goredelo year Alepriciation Tare Credil@yo L 750000X30-17 22 SDOO qoooo 63000 2 525000 X30.1- 157500 3 367500 X30.1. 110250 YU100 30870 Question: 11. Champlain Transportation Inc. is considering a five-year proj... 11. Champlain Transportation Inc. is considering a five-year project that requires an initial capital investment of $1 million. The project is expected to generate operating revenue of $500,000 per year, and the associated operating expenses are estimated at $250,000 per year. The capital asset belongs to asset class 9, which has a CCA rate of 30 percent. The firm's tax rate is 35 percent. What is the after-tax cash flow for year 1? a. $110,000 b. $215,000 C. $302,500 d. $312,500 Expert Answer Vipul Vashisht answered this 7,965 answers Was this answer helpful? 11. Champlain Transportation Inc. is considering a five-year project that requires an initial capital investment of $1 million. The project is expected to generate operating revenue of $500,000 per year, and the associated operating expenses are estimated at $250,000 per year. The capital asset belongs to asset class 9, which has a CCA rate of 30 percent. The firm's tax rate is 35 percent. What is the after-tax cash flow for year 1? a. $110,000 b. $215,000 C. $302,500 d. $312,500 Initial Investment = $ 1,000,000 Revenue = $ 500,000 Operating Exp. = $ 250,000 Capital Asset belongs to asset class 9, which has a CCA rate = 30% Beginning UCC = $ 1000,000*50% = $ 500,000 CCA depreciation = $500,000*30% = $150,000 Calculating the after tax cash flow for year 1:- Particular Amount in $ Revenue 500,000 Less: Operating Exp (250,000) Less: CCA dep. (150,000) Earnings before Tax 100,000 Less: Tax @ 35% (35,000) Net Income 65,000