Question
Help me please I can't understand this at all. Please use a graph that I can easily understand. Manning Corporation is considering a new project
Help me please I can't understand this at all. Please use a graph that I can easily understand.
Manning Corporation is considering a new project requiring a $110,000 investment in test equipment with no salvage value. The project would produce $69,500 of pretax income before depreciation at the end of each of the next six years. The companys income tax rate is 34%. In compiling its tax return and computing its income tax payments, the company can choose between the two alternative depreciation schedules shown in the table. (FV of $1, PV of $1, FVA of $1 and PVA of $1) (Use MACRS) (Use appropriate factor(s) from the tables provided.) |
Straight-Line Depreciation | MACRS Depreciation | |||||||
Year 1 | $ | 11,000 | $ | 22,000 | ||||
Year 2 | 22,000 | 35,200 | ||||||
Year 3 | 22,000 | 21,120 | ||||||
Year 4 | 22,000 | 12,672 | ||||||
Year 5 | 22,000 | 12,672 | ||||||
Year 6 | 11,000 | 6,336 | ||||||
Totals | $ | 110,000 | $ | 110,000 | ||||
9.
value: 2.00 points
Required information
Required: | |
1. | Complete the following table assuming use of straight-line depreciation. Net cash flow equals the amount of income before depreciation minus the income taxes. |
10.
value: 2.00 points
Required information
2. | Complete the following table assuming use of MACRS depreciation. Net cash flow equals the amount of income before depreciation minus the income taxes. |
11.
value: 2.00 points
Required information
3. | Compute the net present value of the investment if straight-line depreciation is used. Use 12% as the discount rate. |
12.
value: 2.00 points
Required information
4. | Compute the net present value of the investment if MACRS depreciation is used. Use 12% as the discount rate. |
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