Net Salvage Value Problem

Is depreciation an incremental and relevant cash flow for capital budgeting purposes? It not, why is it considered what determining an asset's FCFs? Replication, Inc. is considering purchasing a new and improved cloning machine The firm estimates that, if all goes according to expectations, the machine will only be needed for 5 years. The machine will initially cost SI 00,000 (in year 0). Depreciation per year is $12,000. The firm's effective tax rate is 30%. Calculate the machine's net salvage value (NSV) assuming that expectations are met and that the new machine will have no salvage (market) value in Year 5 Calculate the machine's net salvage value (NSV) assuming that expectations are met and that the salvage (market) value of new machine in year 5 is forecasted to be $50,000. You are going into the motorcycle selling and fixing business. You need to purchase $50,000 worth of equipment to run the mechanic portion of the business. At the end of year 6 you plan on selling the equipment, and expect its market value at that time to be $20,000. Depreciation is forecasted at $2,000 a year. If the effective tax rate is 40%, what, then, will be the net cash flow the business will receive at the end of year 6 from disposal of the equipment? Three years ago, Lander, Inc. bought an abacus for $ 10,000. Now. three years later and after accumulating $3,000 in depreciation, the corporation sold the abacus for $5,000. If Lander. Inc s effective tax rate is 30%, what is the net salvage vale (NSV) of the abacus (i.e.. at the time of the sale)? Lander Inc forgot how much it originally paid two years ago for an abacus. (A different one than the one above ) Now. two years later and after accumulating $ 1.000 in depreciation, the corporation sold the asset for $$.500. The book value of the abacus was $6,000 and its net salvage value What was the purchase price of the abacus? What tax rate was used to determine the net salvage valued