Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Mr. Yamada bought a new $24,000 freezer for his grocery store on January 2, 2013. The freezer has a 3-year economic life and recovery period,

image text in transcribedimage text in transcribedimage text in transcribed

Mr. Yamada bought a new $24,000 freezer for his grocery store on January 2, 2013. The freezer has a 3-year economic life and recovery period, Mr. Yamada's required rate of return is 12%, and his tax rate is 40%. : (Click the icon to view the present value of $1 of MACRS Depreciation table.) (Click the icon to view the present value factor table.) Click the icon to view the present value annuity factor table.) Read the requirements Requirement 1. Suppose Mr. Yamada uses straight-line depreciation for tax purposes. Compute the PV of the tax savings from depreciation. Assume that Mr. Yamada takes a full year of depreciation at the end of 2013. (Enter the present value factor to four decimal places, "X.XXXX." Round dollar amounts the nearest whole number.) Present Value of Annual Cash Total Present Ordinary Annuity of $1 at 3 years, 12% Inflow Value Present value of annuity of equal annual: After-tax cash savings from depreciation X per year = Danuiramant 2 Guinnen Mr Vamada en MACDO danracistian fartav numnacac Camnuta tha DV of the tavsvinne from danracistian (Daund aur newer to Choose from any list or enter any number in the input fields and then continue to the next question. Mr. Yamada bought a new $24,000 freezer for his grocery store on January 2, 2013. The freezer has a 3-year economic life and recovery period, Mr. Yamada's required rate of return is 12%, and his tax rate is 40%. (Click the icon to view the present value of $1 of MACRS Depreciation table.) (Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) Read the requirements. Requirement 2. Suppose Mr. Yamada uses MACRS depreciation for tax purposes. Compute the PV of the tax savings from depreciation. (Round your answer to the nearest whole number.) Begin by selecting the formula you will need to calculate this amount. PV of the MACRS Tax Savings The PV of the tax savings from depreciation using MACRS is $ Requirement 3. Suppose Mr. Yamada was allowed to immediately deduct the entire cost of the freezer for tax purposes. Compute the PV of the tax savings from depreciation. Begin by selecting the formula you will need to calculate this amount. Choose from any list or enter any number in the input fields and then continue to the next question. Mr. Yamada bought a new $24,000 freezer for his grocery store on January 2, 2013. The freezer has a 3-year economic life and recovery period, Mr. Yamada's required rate of return is 12%, and his tax rate is 40% (Click the icon to view the present value of $1 of MACRS Depreciation table.) (Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) Read the requirements Requirement 3. Suppose Mr. Yamada was allowed to immediately deduct the entire cost of the freezer for tax purposes. Compute the PV of the tax savings from depreciation. Begin by selecting the formula you will need to calculate this amount. PV of the Immediate Write-off Tax Savings The PV of the tax saving from the immediate deduction of the freezer for tax purposes is SO Requirement 4. Which of the three methods of deducting the cost of the freezer would Mr. Yamada prefer if all three were allowable for tax purposes? Why? Mr. Yamada would prefer the method of deducting the cost of the freezer. The total tax savings is under all three methods; however, only the provides the entire savings Choose from any list or enter any number in the input fields and then continue to the next question. Mr. Yamada bought a new $24,000 freezer for his grocery store on January 2, 2013. The freezer has a 3-year economic life and recovery period, Mr. Yamada's required rate of return is 12%, and his tax rate is 40%. : (Click the icon to view the present value of $1 of MACRS Depreciation table.) (Click the icon to view the present value factor table.) Click the icon to view the present value annuity factor table.) Read the requirements Requirement 1. Suppose Mr. Yamada uses straight-line depreciation for tax purposes. Compute the PV of the tax savings from depreciation. Assume that Mr. Yamada takes a full year of depreciation at the end of 2013. (Enter the present value factor to four decimal places, "X.XXXX." Round dollar amounts the nearest whole number.) Present Value of Annual Cash Total Present Ordinary Annuity of $1 at 3 years, 12% Inflow Value Present value of annuity of equal annual: After-tax cash savings from depreciation X per year = Danuiramant 2 Guinnen Mr Vamada en MACDO danracistian fartav numnacac Camnuta tha DV of the tavsvinne from danracistian (Daund aur newer to Choose from any list or enter any number in the input fields and then continue to the next question. Mr. Yamada bought a new $24,000 freezer for his grocery store on January 2, 2013. The freezer has a 3-year economic life and recovery period, Mr. Yamada's required rate of return is 12%, and his tax rate is 40%. (Click the icon to view the present value of $1 of MACRS Depreciation table.) (Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) Read the requirements. Requirement 2. Suppose Mr. Yamada uses MACRS depreciation for tax purposes. Compute the PV of the tax savings from depreciation. (Round your answer to the nearest whole number.) Begin by selecting the formula you will need to calculate this amount. PV of the MACRS Tax Savings The PV of the tax savings from depreciation using MACRS is $ Requirement 3. Suppose Mr. Yamada was allowed to immediately deduct the entire cost of the freezer for tax purposes. Compute the PV of the tax savings from depreciation. Begin by selecting the formula you will need to calculate this amount. Choose from any list or enter any number in the input fields and then continue to the next question. Mr. Yamada bought a new $24,000 freezer for his grocery store on January 2, 2013. The freezer has a 3-year economic life and recovery period, Mr. Yamada's required rate of return is 12%, and his tax rate is 40% (Click the icon to view the present value of $1 of MACRS Depreciation table.) (Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) Read the requirements Requirement 3. Suppose Mr. Yamada was allowed to immediately deduct the entire cost of the freezer for tax purposes. Compute the PV of the tax savings from depreciation. Begin by selecting the formula you will need to calculate this amount. PV of the Immediate Write-off Tax Savings The PV of the tax saving from the immediate deduction of the freezer for tax purposes is SO Requirement 4. Which of the three methods of deducting the cost of the freezer would Mr. Yamada prefer if all three were allowable for tax purposes? Why? Mr. Yamada would prefer the method of deducting the cost of the freezer. The total tax savings is under all three methods; however, only the provides the entire savings Choose from any list or enter any number in the input fields and then continue to the next

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

Islamic FinanceA Practical Perspective

Authors: Nafis Alam, Lokesh Gupta, Bala Shanmugam

1st Edition

3319665588, 9783319665580

More Books

Students also viewed these Finance questions