Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Firm X is considering the replacement of an old machine with one that has a purchase price of $80,000. The current market value of the

Firm X is considering the replacement of an old machine with one that has a purchase price of $80,000. The current market value of the old machine is $20,000 but the book value is $39,000. The firm's tax rate for ordinary income is 27%. What is the net cash outflow for the new machine after considering the sale of the old machine?

$60,740

$67,220

$54,870

$51,470

Assume a corporation has earnings before depreciation and taxes of $100,000, depreciation of $50,000, and that it has a 35 percent tax bracket. What are the after-tax cash flows for the company?

$77,300

$87,100

$86,300

$82,500

An asset fitting into the 7-year MACRS category was purchased 2 years ago for $115,000. The book value of this asset is now (Do not round intermediate calculations.)

$84,603

$70,403

$65,203

$75,003

Assume a corporation has earnings before depreciation and taxes of $95,000, depreciation of $45,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company?

$80,000

$83,800

$84,600

$74,800

Firm X is considering the replacement of an old machine with one that has a purchase price of $65,000. The current market value of the old machine is $25,000 but the book value is $36,000. The firm's tax rate for ordinary income is 35%. What is the net cash outflow for the new machine after considering the sale of the old machine?

$42,020

$48,500

$36,150

$32,750

A project requires an investment of $900 and has a net present value of $300. If the IRR is 11%, what is the profitability index for the project? (Round your answer to 2 decimal places.)

2.56

0.53

0.11

1.33

The Wet Corp. has an investment project that will reduce expenses by $20,000 per year for 3 years. The project's cost is $15,000. If the asset is part of the 3-year MACRS category (33.33% first year depreciation) and the company's tax rate is 33%, what is the cash flow from the project in year 1? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

$16,510

$15,050

$15,830

$14,500

An asset fitting into the 7-year MACRS category was purchased 2 years ago for $85,000. The book value of this asset is now (Do not round intermediate calculations.)

$46,837

$66,237

$52,037

$56,637

The Wet Corp. has an investment project that will reduce expenses by $25,000 per year for 3 years. The project's cost is $35,000. If the asset is part of the 3-year MACRS category (33.33% first year depreciation) and the company's tax rate is 34%, what is the cash flow from the project in year 1? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

$21,246

$21,926

$20,466

$19,916

A project requires an investment of $1,200 and has a net present value of $400. If the IRR is 13%, what is the profitability index for the project? (Round your answer to 2 decimal places.)

2.56

0.53

0.13

1.33

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

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

Recommended Textbook for

Quantitative Trading

Authors: Ernest P. Chan

2nd Edition

1119800064, 978-1119800064

More Books

Students also viewed these Finance questions

Question

=+What needs to be said first?

Answered: 1 week ago

Question

=+You couldn't expect more from a cow, could you?

Answered: 1 week ago