Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please help me with both. thank you!! Marshall-Miller & Company is considering the purchase of a new machine for $40,000, installed. The machine has a
Please help me with both. thank you!!
Marshall-Miller & Company is considering the purchase of a new machine for $40,000, installed. The machine has a tax life of 5 years. Under the new tax law, the machine is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. The firm expects to operate the machine for 4 years and then to sell it for $21,800. If the marginal tax rate is 25%, what will the after-tax salvage value be when the machine is sold at the end of Year 4? O a. $18,350 O b. $27,250 O c. $15,800 O d. $16,350 O e. $11,450 Thomson Media is considering some new equipment whose data are shown below. The equipment has a 3-year tax life. Under the new tax law, the equipment is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. The equipment would have a positive pre-tax salvage value at the end of Year 3, when the project would be closed down. Also, additional net operating working capital (NOWC) would be required, but it would be recovered at the end of the project's life. Revenues and operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC 10.0% Equipment cost $95,000 Required net operating working capital (NOWC) $12,000 Annual sales revenues $72,000 Annual operating costs $30,000 Expected pre-tax salvage value $5,000 Tax rate 25.0% O a. $2,857 O b. $4,665 O c. $7,086 O d. $6.919 O e. 57,858Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started