MG, a corporation in the 21 percent marginal tax bracket, owns equipment that is fully depreciated. This old equipment is still operating and should continue to do so for four years (years 0. 1. 2 and 3). MG's chlef financial officer estimates that repair costs for the old equipment will be $1,300 in year 0. $1.400 in year 1. $1,500 in year 2, and $1600 in year 3. At the end of year 3, the equipment will have no residual value. MG could junk the old equipment and buy new equipment for $5,000 cash. The new equipment will have a three-year MACRS recovery period, should not require any repairs during years through 3. and will have no residual value at the end of year 2 Assume MG cannot make a Section 179 election to expense the $5.000 cost of the new equipment. Use a 10 percent discount rate Use Table 2.2. Arnendix A and Bendix B Required: -1. Calculate the NPV of alter tax cost if MG keeps the old equipment -2. Calculate the NPV of after-tax cost if MG buys new equipment 8-3. Which option keep old or buy new) minimizes MG's after tax cost? b. Assume MG can make a Section 179 election to expense the entire 55.000 cost of the new equipment. Under this change in facts. which option keep old or buy new) minimes MG's after tax cost? Complete this question by entering your answers in the talis below. Reg A1 Red A Red AS Calodate the w of after tax cost if MG keeps to quant and mediate computation and was to the There whole da Cashotos and the amount should be cated hy as Deduct Twin Net Cash Puy 10 Next > O . die 3 $ 4 96 5 2 o 3 BANDAR W 8 9 W E 20 T Y P O S t D F G H J K pau U N M Assume MG cannot make a Section 179 election to expense the $5,000 cost of the new equipment. Use a 10 percent discount rate. Use late 12. Apendix A and Argendi Required: -1. Calculate the NPV of alter-tax cost of MG keeps the old equipment -2. Calculate the NPV of after-tax cost of MG buys new equipment .-3. Which option keep old or buy new, minimizes MGS aftertax cost? b. Assume MG can make a Section 179 election to expense the entire 55.000 cost of the new equipment. Under this change in facts, which option keep old or buy new) minimizes MG's after tax cost? Complete this question by entering your answers in the tabs below. RA1 Roq A2 RAS legs Calculate the NPV of after-tax contiMG Koes the old equipment Cound in commotte nearest whole dotat. Cash Buttons and Negative amount hold be indicated by Deductible Repaita Net Ceth Frant Value 211 1 2 2 3 Now Reg A2 Next > toom to march Hi home + # 8 bum 5 4 9 5 3 6 00 9 2 O o P W 1 U R Y T K HO G S DE L ? DAU - ter-tax cost if MG keeps the old equipment 6-2. Calculate the NPV of after-tax cost if MG buys new equipment. 6-3. Which option (keep old or buy new) minimizes MG's after-tax cost? b. Assume MG can make a Section 179 election to expense the entire $5,000 cost of the new equipment. Under this change in facts. which option (keep old or buy new) minimizes MG's after-tax cost? Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Reg A3 Reg B Calculate the NPV of atter-tax cost if MG buys now equipment. (Round Intermediate computations and Rival ariswers to the nearest whole dollar amount. Cash outflows and Negative amount should be indicated by a minus sign.) Cash Paid on Recovery Tax Savings Year Purchase Present Value at Deduction at 21% Net Cash Flow 10% 0 + 2 3 NPV of torax cost value at the end of year 3. MG cannot make a Section 179 election to expense the $5,000 cost of the new equipment. Use a 10 percent discount rate. Use Table 7.2. Arpendix A and Appendix B. Required: 0-1. Calculate the NPV of after tax cost if MG keeps the old equipment 0-2. Calculate the NPV of after-tax cost if MG buys new equipment 0-3. Which option (keep old or buy new) minimizes MG's after-tax cost? b. Assume MG can make a Section 179 election to expense the entire $5,000 cost of the new equipment. Under this change in facts, which option (keep old or buy new) minimizes MG's after-tax cost? Complete this question by entering your answers in the tabs below. Red A1 Reg A2 Req A3 Req Which option (keep old or buy new) minimizes MG's after-tax cost? Buy new equipment Keep old equipment Help Assume MG cannot make a Section 179 election to expense the $5,000 cost of the new equipment. Use a 10 percent discount rate. Use Table 1-2. Argendix A and Ancendix B. Required: 0-1. Calculate the NPV of after tax cost if MG keeps the old equipment 6-2. Calculate the NPV of after-tax cost if MG buys new equipment --3. Which option keep old or buy new) minimizes MG's after-tax cost? b. Assume MG can make a Section 179 election to expense the entire $5,000 cost of the new equipment. Under this change in facts, which option keep old or buy new) minimizes MG's after-tax cost? Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Req A3 Reg Assume MG can make a Section 179 election to expense the entire $5,000 cost of the new equipment. Under this change in facts, which option (keep old or buy new) minimizes MG's after tax cont? Buy new equipment Koep old equipment O . die 3 $ 4 96 5 2 o 3 BANDAR W 8 9 W E 20 T Y P O S t D F G H J K pau U N M Assume MG cannot make a Section 179 election to expense the $5,000 cost of the new equipment. Use a 10 percent discount rate. Use late 12. Apendix A and Argendi Required: -1. Calculate the NPV of alter-tax cost of MG keeps the old equipment -2. Calculate the NPV of after-tax cost of MG buys new equipment .-3. Which option keep old or buy new, minimizes MGS aftertax cost? b. Assume MG can make a Section 179 election to expense the entire 55.000 cost of the new equipment. Under this change in facts, which option keep old or buy new) minimizes MG's after tax cost? Complete this question by entering your answers in the tabs below. RA1 Roq A2 RAS legs Calculate the NPV of after-tax contiMG Koes the old equipment Cound in commotte nearest whole dotat. Cash Buttons and Negative amount hold be indicated by Deductible Repaita Net Ceth Frant Value 211 1 2 2 3 Now Reg A2 Next > toom to march Hi home + # 8 bum 5 4 9 5 3 6 00 9 2 O o P W 1 U R Y T K HO G S DE L ? DAU - ter-tax cost if MG keeps the old equipment 6-2. Calculate the NPV of after-tax cost if MG buys new equipment. 6-3. Which option (keep old or buy new) minimizes MG's after-tax cost? b. Assume MG can make a Section 179 election to expense the entire $5,000 cost of the new equipment. Under this change in facts. which option (keep old or buy new) minimizes MG's after-tax cost? Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Reg A3 Reg B Calculate the NPV of atter-tax cost if MG buys now equipment. (Round Intermediate computations and Rival ariswers to the nearest whole dollar amount. Cash outflows and Negative amount should be indicated by a minus sign.) Cash Paid on Recovery Tax Savings Year Purchase Present Value at Deduction at 21% Net Cash Flow 10% 0 + 2 3 NPV of torax cost value at the end of year 3. MG cannot make a Section 179 election to expense the $5,000 cost of the new equipment. Use a 10 percent discount rate. Use Table 7.2. Arpendix A and Appendix B. Required: 0-1. Calculate the NPV of after tax cost if MG keeps the old equipment 0-2. Calculate the NPV of after-tax cost if MG buys new equipment 0-3. Which option (keep old or buy new) minimizes MG's after-tax cost? b. Assume MG can make a Section 179 election to expense the entire $5,000 cost of the new equipment. Under this change in facts, which option (keep old or buy new) minimizes MG's after-tax cost? Complete this question by entering your answers in the tabs below. Red A1 Reg A2 Req A3 Req Which option (keep old or buy new) minimizes MG's after-tax cost? Buy new equipment Keep old equipment Help Assume MG cannot make a Section 179 election to expense the $5,000 cost of the new equipment. Use a 10 percent discount rate. Use Table 1-2. Argendix A and Ancendix B. Required: 0-1. Calculate the NPV of after tax cost if MG keeps the old equipment 6-2. Calculate the NPV of after-tax cost if MG buys new equipment --3. Which option keep old or buy new) minimizes MG's after-tax cost? b. Assume MG can make a Section 179 election to expense the entire $5,000 cost of the new equipment. Under this change in facts, which option keep old or buy new) minimizes MG's after-tax cost? Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Req A3 Reg Assume MG can make a Section 179 election to expense the entire $5,000 cost of the new equipment. Under this change in facts, which option (keep old or buy new) minimizes MG's after tax cont? Buy new equipment Koep old equipment